It’s the new year and many people are looking at ways to make improvements in various aspects of their lives. For some, that includes investing more time teaching their kids some basics they need to know before living on their own. If that’s you, keep reading for tips to help your kids establish healthy money habits from a young age.
7 tips on how to develop good money habits in children
- Keep it Simple, Silly. K-I-S-S applies to finances whether you are teaching a toddler, teenager or even an adult child about money. Start with the basics and lay a solid foundation. Give an overview of how the U.S. monetary system works, what things money is used for (housing, food, etc.) and keep the learning going. Once your child(ren) has a good grasp of the basics of how earning and spending money works, start talking about loans, credit cards, credit scores, savings accounts, donations/giving money and more. Check out resources on the Verve site and become a student yourself as you are teaching your kids about money.
- Lead by example. Helping your kids develop a healthy lifestyle, including their financial habits, starts with your own habits. When you are doing something that includes money, loop your children into what is happening (when it’s appropriate). For example, if you are checking out at the grocery store, you can talk about how you are using cash, a debit card or a credit card and where that money is coming from and how you got it. It helps show your kids the value of your money and you can explain what you are purchasing and why. Remember that with every financial decision you make, your children are watching, meaning there are a lot of teaching opportunities.
- Make it fun. Playing games, getting your kids involved in real-life situations (such as counting up change) or even making a budget pizza. Check out these eight fun ways to teach your kids about savings.
- Provide opportunities to earn income. Talking about money is great but putting it into practice is even better. Whether it’s through an allowance or helping your kids earn money through other means, such as a lemonade stand, doing chores for a neighbor or other entrepreneurial adventures, helping your kids earn money is a great way to make it more real for them. This will be their money to manage, and gives you an opportunity talk about earning money, saving money, spending money and giving money.
- Don’t dismiss questions. It’s true, kids ask A LOT of questions. And those questions can be exhausting to answer and hard to keep up with. BUT, it’s with those questions that your little ones are learning, so take a deep breath and either answer the questions (if they are appropriate) or let your child know you will answer their questions at another time (especially if it is a question that you may need to do a bit more research on or includes a longer explanation).
- Give historical examples. Telling stories from famous people or providing examples from your own family can help widen your child’s financial perspective. Whether it’s a feel-good story about a celebrity or professional athlete getting out of poverty, or a family member’s business venture, real-life examples can serve as great education or motivation for your child’s own goals.
- Help them set realistic goals. The last one is a big one. Just like you may have goals (either financial or otherwise), your kids can have goals, too. Ask your child what they would like to do or purchase in the future and help them outline the ways they will reach those goals. Be sure to set a variety of goals, some that can be reached sooner rather than later to help them stay motivated toward their goals.
Looking for more ideas on how to help your family establish good money habits? Check out our Family Finances blog posts.