Want to instill wise financial management skills in your kids? Here are three practical ways we’re teaching our kids about money…
“When should we start teaching our kids about money?”
We hear this question a lot — from friends, from people I meet at conferences, and often from readers. Our response is always the same, “As soon as possible!”
My husband and I believe wholeheartedly that it’s never too early to start teaching your kids about money! The sooner they can learn the value of money and how to handle money, the sooner they can begin to develop a strong foundation for wise money management.
We started teaching all of our kids about money from the time they were about two. When they are old enough to not swallow money, they are old enough to learn about how to start using it well! 😉
My husband and I were blessed to come from homes where wise money management was modeled. And we are forever grateful to our parents and grandparents for the gift they gave us in this. We know that there’s no way that we would be in the financial position we are in if it were not for the foundation they gave us.
It’s our hope that we can pass on this same foundation to our kids, too. Which is why it’s so important to us to make teaching our kids about money a very important priority in our home.
Here are three practical ways we are teaching our kids about money:
1. We Talk About Our Own Money Choices
Since the time our kids have been toddlers, we’ve talked about money and the choices we’ve made when it comes to finances. We’ve started out in small ways and gradually shared more as they’ve asked more questions.
We’ve talked about why we live on a budget, why we save up and pay cash for things, why we wait to make purchases why we don’t use credit cards, why we don’t go into debt, why they are currently sharing a bedroom, and why we don’t have a mortgage.
In addition to talking about our money choices, we’ve also sought to model wise money management before our kids. They hear us talking about our budget together. They see us making sacrifices to pay for things. They watch us paying cash for things. They see us deciding not to buy something because it’s not a good enough deal.
I believe that it’s very important to teach through our words and through our life. Because often more is caught than taught.
This was definitely true for me. My parents taught me that money is a tool. In the hands of wise stewards, it can be put to good use and make a huge impact. In the hands of those who are unwise, it can be wasted and blown with nothing to show for it.
With their lives and checkbooks, they modeled the importance of being wise in how you use and manage money. It wasn’t about saving money for saving money’s sake, but so that you could use that money saved to impact and help other people. To invest in things that matter, to bless people, to donate to causes you believe in, and to give generously.
Seeing my parents’ sacrifices and creative commitment to living debt-free and how it put them in position to be able to give generously because they worked so hard to no longer have a house payment was a huge inspiration to my husband and me.
How to Teach Through Every Day Life
Recently, I took Kathrynne (12) and Silas (7) with me to Kroger. I had so much fun going through the aisles with them, showing them simple ways I save money at the store.
I shared with them that Jesse was in law school, we only had $17-$30 a week to spend on groceries, so I had to get very creative with menu-planning, shopping the markdowns, playing the Drugstore Game, and using coupons.
I told them how I would dumpster dive and search through the recycle bins for coupons. Between pairing the coupons and the markdowns, along with creativity, we were able to survive on a minimal budget.
We played The Markdown Game at the store — looking for the yellow markdown stickers and then, once we found them, deciding whether it was a really good deal or not. Teaching them that some deals aren’t as good as they seem and that it’s not a good deal if you don’t have the money for it is a fantastic way to connect the dots for them and increase the value of the dollar in their mind.
So we discussed our budget, and I helped them decide whether or not an item fit in our budget. We had so much fun doing this together — and we came away with some really great deals, too!
Near the end of the shopping trip, one of them said, “So when I go away to college, I can do this, too. I can afford to live and not go into debt.” Yes!
2. We Give Them Opportunities to Handle Money
We have our children start paying for things from a young age. In fact, from the time all our children were three or four years old, they had their own spending money that they had earned by doing chores and projects for us.
When we’re out shopping, they can bring their own spending money and spend it however they’d like (within reason!). This helps them learn valuable money management skills and also prevents the gimme attitude that can quickly pop up when out shopping.
If a child sees something they want and they ask me if we can buy it, my response is always, “Did you bring your money?”
I also love the real-life skills our children are learning from taking their items up to the register and paying for them themselves. They learn about counting change, interacting with sales clerks, and making sure they have enough money to pay for their items in the first place.
One of the greatest joys of paying our children for doing chores has been watching them become generous givers. We encourage them to set aside a portion of their money for giving and we regularly talk about the needs around the world.
We’ve been so proud to watch our children fund Operation Christmas Child boxes and buy goats and chickens and help fund a water project for those in other countries through Samaritan’s Purse. Truly, there has been nothing more rewarding as a parent than seeing our children want to follow our family’s mantra to “Live simply so others can simply live.”
3. We Let Them Make Money Mistakes
When our children to use their own spending money to buy things they want to purchase, we don’t give a whole lot of input or guidance — unless they ask us for it. Why?
Because we want them to learn how to think through the wisdom of purchases on their own. We won’t always be around to guide their purchases, so we want them to learn to think through what the best deal is and what the best use of their money is without a lot of prodding from us.
We also want them to make money mistakes. This might seem harsh, but we’d much rather have them make $3 mistakes now when they are little to hopefully prevent some $3,000 and $30,000 mistakes down the road.
They’ve learned a lot of lessons when they bought cheap items that were broken within a few days and they’ve learned that spending all your hard-earned money on some impulse purchase can often lead to regret. These instances have resulted in great discussions about how to carefully think through purchases and how to make sure you’re making the best use of your money.
How do you teach your children good money management skills? I’d love to hear!
Kostas Chiotis says
As kids, whenever we wanted something and our parents couldn’t afford it, all they would say was, ” We’ll buy that later when we get extra money.” Those moments could have been great teaching opportunities about handling money and budgets.
I still learned about finances eventually but your kids are lucky you teach them about these stuff at a young age.
We have done many of these things with our children. They are quite savy with finances at the ages of 11, 9, and 6 years. I really like how you took your kids to the grocery and taught them how you shop. I think that’s something I will try at some point, perhaps one at a time.
Crystal Paine says
Thanks so much for your encouragement!
Great tips, and Beth’s book looks great too!
Just to build on the first thing you mentioned, I once read you should never tell your kids “I can’t afford it” when declining to buy something they want. Instead, say “I haven’t budgeted for it” or something along those lines. The idea was that if you say you can’t afford it, kids get the idea that once they have enough money, they can by whatever they want whenever they want. But by saying it’s not in the budget, you’re sending the message that you should always have a plan for your money. Wish I could remember who wrote that, but it’s always stuck with me.
Crystal Paine says
What a great suggestion! Thanks so much for sharing that!