What You Can Teach Your Kids About Money While They Are Home
By Todd I. Youngdahl, CFP®
Kids are smart. Depending on the age of your children, they may not know or understand exactly what is going on right now, but they are looking to you for guidance and assurance.
Talking to your children about money may seem like a foreign concept or a scary endeavor if no one ever taught you about how to use money well. But here’s the deal, it doesn’t need to be any more complicated than talking about how to save, spend, and give, and how to prioritize when to do those things.
What a great way to set the next generation up for success by educating them about how to handle money now, before they have any huge expenses or responsibilities!
The importance of having savings isn’t always as clear as it is right now. We don’t know what life will throw at us, and this pandemic is a great opportunity to involve your kids in prioritizing saving, not spending everything they have.
Depending on the age of your child, use an example of something they enjoy doing or might like to have that would require saving. With the money they have from chores, an allowance, birthday money, etc., tell them to put some aside for that larger purchase. Use visuals so they can stay motivated to stay on track (this is great for adults too)! Create your own charts or find charts others have made here, on Pinterest, Etsy, or look up kid-friendly money curricula.
Most kids won’t have a problem with this concept. It’ll come all too naturally, am I right? However, instead of buying them whatever they ask for or giving them random cash here and there, show them how to manage what they spend. Put money in their own hands on a consistent basis, let them choose how to spend the money they have, and live with the choices they make. Whether it’s $5 or $500, the same concepts apply.
Communicate that the money in their possession is theirs to spend on whatever they want (within reason), but no more, and what they have probably won’t buy them everything they want right now. This is where you can bring up savings and that the less they spend now, the more they’ll have for later.
Here are a couple of helpful videos to watch as well:
- The Surprising Way to Teach Your Kids to Be Smart With Money (TEDx Talks)
- The Best Way to Teach Your Children About Money (WSJ)
Giving and sharing can be applied to more than just toys. Teaching children to be generous with their time and money isn’t often taught, but there are countless opportunities to show them how to be generous and why it’s important. Social contact is limited right now, but people still need food and basic supplies. Maybe there is a neighbor or non-profit you know of where your kids could make a meal and drop it off at the door or join you to deliver other supplies. Kids learn best by doing and they will remember an experience like this. Click here to read another article that will give you more ideas on how to communicate giving to your children.
Your children will understand this concept when they move out, but I can’t think of a better time to start communicating the difference between needs and wants. The almost frightening shortage of toilet paper in many stores goes to show it’s a huge necessity over most things! I’m sure this is not the first time you’ve heard about that, so let’s move on to how you can explain needs vs. wants with your children.
Get creative! Go through an exercise of needs vs. wants, and make it a game. Bring out the necessities, like toilet paper, canned soup, and whatever else you view as a necessity, and then a few toys, phones, or tablets as wants. You can do a mini-version of The Price Is Right by having them guess how much those items cost and if it’s a “need” or “want” item. Whoever wins gets $5 of spending money (or whatever you want as the prize).
You’ve laid the groundwork; now you lead by example and consistently remind your kids of these principles when it comes time for them to make bigger financial decisions.
We all want to set our children up for success, regardless of what background or upbringing we come from. Teaching your children about money is a huge part of helping them succeed in life; another way is to start them off with funds for college, their first house, a wedding, or other large expense. We at Washington Wealth Advisors can talk with you about starting a 529, IRA, or other investment accounts that will help your savings for them grow. Call our office at (703) 584-2700 or email email@example.com to discuss how we can assist you.
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