A.K.A. Why Should You Teach Your Kid How to Manage Their Money and a Few Tips on Getting Started.
“The Old Saying”
Remember the old saying, “What they don’t know won’t hurt em’?” Well guess what: this is one of the oldest myths in history. Remember, a myth is a widely held but false belief or idea; in other words, an untruth, or a lie! What people don’t know will hurt them, especially when it comes to teaching your kids how to manage money. If you think about it, everything we learned as kids has impacted us as adults. Therefore, we have to remember that whatever we teach our kids now will impact them as they get older and start “adulting.”
So why, why start teaching your kids how to manage their money? The answer is simple: we teach them about everything else! We teach them about manners, caring for others, sharing, respecting others, and of course, “The Golden Rule.” These are all life lessons that will help them to become loving, productive human beings.
Learning about their money is an essential skill that, as parents, we have the opportunity to teach them over several years of their lives. The younger you start, the better. By the time they are ready to leave the nest, they will be well equipped to manage their money.
So what age should they start learning and what should you actually teach them? The earlier the better. Children learn so much more than we actually give them credit for when they are between the ages of 3-5. At this age, they literally soak up everything like a sponge. You will be their first example with seeing money, counting money, paying bills, going to the bank, and carrying a purse or wallet. Kids need to learn how to count money, save money, write out a plan/budget, open a checking and savings account, and one of the most important concepts: how to give.
The How: Spending, Saving, Giving
Let’s talk about some simple things you can start doing now that will help your kids have a better understanding of managing their money.
- Allow your kids to see their money. Provide a clear container that will let them see their money grow. You know how you feel when you see your bank account full… they should experience that same feeling.
- Make sure your kids can count their money. This means you will have to make sure you provide them with some. Small amounts to put in their pockets will give them the chance to actually handle money. They can touch it, know and see the differences in the coins and the notes/bills. If you provide them with money in small increments each week, they will look forward to having it and eventually will begin to think about what they can do with it.
- Saving, spending, and giving are necessary for this process. When you provide a clear container, be sure to have more than one. They should have one for spending one for saving, and one for giving. If they spend all of their money, then they will not be able to save up for something they may want later. If they save it all, they will not be able to give to others or make charitable donations.
- Encourage them to divide the money you give them into these three jars. As you’re teaching them, tell them, “when you spend, don’t spend it all. Set a goal for your savings, and always find a way to give to others in need.” Allow them to spend on their necessities. As parents, we definitely provide these things for a long time, but you must teach them to buy their needs before their wants. Even if it’s a new toothbrush, let them buy one each month.
- When it comes to their savings, they should set a goal. This goal is usually some type of toy they have really been wanting. Make sure this toy, or whatever it is, they are saving for costs more than what you give them so they will definitely have to save for it. Help them to keep track of their goal by creating a chart so that they can see what they have saved so far.
- Lastly, when it comes to giving, your kids need to learn that there are people, including other kids that may be less fortunate than they are. In Acts 20:35, the Lord reminds us that we must help the weak: “In all things, I have shown you that by working hard in this way we must help the weak and remember the words of the Lord Jesus, how he himself said, ‘It is more blessed to give than to receive.’” When your kids learn to give and to be generous at an early age, they will give and be generous when they are older.
Bringing it Home
There’s so much more I could share, however, this is just the beginning. The important thing is that you start to teach your kids as soon as possible. Remember: what your kids don’t know will hurt them if you don’t teach it to them! Teaching them now about basic money management and concepts will only set them up to be successful with their finances in the future.
Financial Advisor for The Milam Consulting Group, LLC
Personal Finance Educator
“I have a passion for teaching people of all ages how to manage and be good stewards over their money. It’s important that as adults, we teach our kids. It is not a mandatory course in many of our schools, however, we can start at home.”