Were you taught about money as a child? Where did your money habits come from? Our early experiences with money shape our relationships with it as we age. This is why it is important to ensure we instill good money management habits in our children when they are young. Today we will be sharing some tips on how you can do this.
Decide how they are going to receive money.
Some of us may have been raised receiving money after we completed chores. While raising my teenager I found that this method can backfire. It got to the point where he would ask how much he is getting paid for each task he needed to complete. So we opted to give an allowance that was more for learning how to use money and we expected chores get done regardless as it was a household responsibility. A good rule of thumb is one dollar for each year of their age when you decide to do an allowance. A good age to start is around 4-5 years old as they are starting to understand money concepts at this time. You can decide if you want to offer an allowance weekly, bi-weekly or monthly.
If you have an older child, you can teach them some basic entrepreneurial skills and have them do odd jobs for neighbours, start a lemonade stand, car wash, walk dogs, etc. You may even think about doing a family garage sale and your child can sell some things of theirs at their own table.
Buy or create a piggy bank that allows them to save, donate and spend.
A good example would be the Moon Jar or you can also have them make their own using a shoe box. Your child can then split up their money into the three different banks and as such, learn to save, give and have money for themselves. You can decide as a family how much money goes into each bank but I encourage saving more than you spend as it will set good habits when they get older (we can hope). They can decide what they want to save their money for and if they are old enough they can write down their goals in relation to obtaining it. If they cannot write yet, have a discussion around what they can do to save enough money and how long it might take. To make it visual you could draw a large rectangle with incremental amounts along the side and then colour it in each time more money is added so they can see the progress.
Let them decide who they want to donate money to (you may need to offer some ideas). You can bring them there to donate it so they can experience the act of giving first hand. For the money they can spend, let them spend it freely on things you agree on in advance and let them learn from their mistakes when they buy something that turned out not being a good purchase. Even adults learn that lesson often!
Teach them to avoid impulse buys.
Marketing can be fierce and children easily fall for it because they don't understand the trickery behind it. A good rule of thumb that I work with is to wait for at least 24 hours to buy an item that I am interested in. This is something you can teach your child the next time they say they want something. Ask them to wait it out or look at other options first before they make a decision. Reflect on it if they decide not to buy it after all or they make a different decision.
Be a good role model.
Try to follow your own rules as much as possible. Talk to your children about money you are saving for a large project and show them how you are helping the community by donating to others. When you go shopping with them and you see something you really want, tell them you are going to wait for a couple days before making that decision. If you decide not to buy it, communicate that with them and tell them you are happy you waited and why.
Teach them about minimalism and the effects of having too much stuff.
There are so many authors and studies that talk about the negative effects of "stuff". Why do we always feel the need to have all of these things that often get forgotten about in a day? Why do we buy all the hottest gadgets only to find them on the bottom of the toy box a week later? Children don't need these things, the marketing companies make us feel like they do though! There is a big movement right now to get experience gifts for children. Take them to the zoo, on a trip, get them a membership somewhere or just be together as a family playing games outside! Those memories are far more superior to the plastic junk that ends up causing us anxiety.
Teach them how to budget.
A great activity for older children is to think about creating a simple budget with them that highlights how much money is coming in and where it is going. Write down the amount they receive each month and what source it comes from. Then write down the amounts they have to spend, save and donate. Maybe they are paying a monthly fee for a game they like or for a cell phone. Write those in there too so they can see how a budget works. Ensure each dollar is assigned to a category.
Resources for Teaching Kids About Money
TD Bank - Teaching Children About Money
Ultimate Resource for Teaching Kids About Money