5 ways to teach your kids about money
Kind of funny: Today is April Fool’s Day—and it’s the first day of Financial Literacy Month.
Make of that what you will… but one thing’s no joke. It’s time to make financial education a priority.
So in honor of April’s most important cause, I’d love for each and every parent out there to make a point of talking to their kids about money. It’ll be easy with this cheat sheet, which is chock full of tips and ideas to get the dialogue going. Having “the talk” can be as simple as striking up a conversation with your little ones in the checkout line. Trust me: Your kids will one day thank you for it.
1. Take advantage of everyday moments. At the grocery store, explain that we’re always making choices. Sometimes you choose to wear a blue shirt, and sometimes you choose to wear a green shirt. It’s the same at the grocery store. Maybe you only have $1. You can buy two apples or one mango. And you certainly shouldn’t choose cookies (a want) over those apples (a need).
2. Don’t let your kids live in a paperless world. When you visit the ATM, bring your kids along. Explain what the bank is for, what a credit card is, and what an ATM does (and doesn’t do—spit out free money!). It’s important for kids to have experience with actual cash—the stuff a credit card is only a placeholder for. A story I love: When my daughter was 4, she thought dry cleaning was free since we never gave them any money—just plastic. (I wish!)
3. Introduce allowance early. Kids love having their “own” money, so use this as a teachable money moment. Some kids earn allowance for doing chores, but to me, chores are about being part of the family. Instead, I suggest giving kids a reasonable weekly wage, like 50 cents to a dollar for every year of your child’s age. Set rules about how allowance can be spent. For little ones, it’s probably only enough to cover little toys and treats. Older kids may wonder if they’re responsible for fun stuff like movie tickets or needs like lunches and snacks. It’s up to you to decide; just be clear. And encourage kids to save part of their allowance for long-term goals, too.
4. Get your kids used to waiting. When you’re out shopping with your kids, don’t be afraid to point out something you want but can’t afford right now. Delayed gratification is a concept any smart saver should know intimately (bonus: it’s even been linked to good SAT scores!). Spell it out for them: Sometimes you wait at the playground when there’s a long line for the slide. And sometimes you have to pass on tempting items now to save up for one big thing you really want later.
5. Make generosity a habit. It’s not just about spending and saving—it’s also about giving. Next time an allowance or birthday check rolls in, help your kids research a charity they’d like to support. Heifer International was a big hit with my kids. The organization lets you buy livestock—say, a sheep—for a struggling family in a poor country. That’s something a 5-year-old can understand and get excited about (especially my city kids!). And there are lots of ways to help people that don’t cost any money. You can volunteer your time, or make a care package for a friend who’s sick.
How do you teach your kids about money?