Teaching children positive money habits is challenging. Expert opinions abound regarding allowances, encouraging kids to prioritize saving – and more. To teach your kids about money, start with the values you want to instill, and then develop your approach around them.
Start conversations early. Even preschoolers know that money gets you “stuff.” As soon as they utter “I want…” begin explaining the difference between need and want, as well as delayed gratification. Allow children to choose between a treat now or something at the next store.
Do what is right for your family. There will always be a neighbor who pays their child more allowance or succumbs to their youngster’s every demand. Ignoring the external pressure teaches your children to make independent money choices, without worrying about “keeping up with the Jones’.”
As kids mature, discuss the value of education. Opinions differ about parents funding tuition (if they can afford it), or allowing a child to carry some burden of the cost. Regardless of your decision, involve your teen in discussions about the price tag of college and encourage your child to pay a part. If you decide to pay the tuition, have your teen save for their spending money. Challenge them to create a plan for spending. Use the student budget at www.educationcents.org (go to “Resources” tab and find “Tools”). Then, have teens set aside money according to their plan.
In the end, talking about positive money values and modeling healthy financial habits will lay the groundwork for future success.