What to Teach Your Kids About Money

Kids are the next generation, y'all we need to be educating them about money habits, money management, and best practices EARLY so they can start to build wealth for themselves.

Money habits aren't something that's taught in school in a way that is productive and helpful, it's often just about getting a high paying job, but what about saving, investing, and giving them the knowledge about how being financially responsible can impact their life at a time when they can truly start acting on these principles. Before they have major bills, and before they are out on their own.

I'm going to walk you through how to teach your kids about money, tips on how to save money, how to spend money wisely, opening bank accounts, and most importantly, learning to manage their own finances.

Teaching young children about money

If you're a parent with kids, or preparing for kids, you may already know that kids understand more than we think - and we need to take advantage of that and set them up for success early so they can actively plan for their future as they grow up, instead of feeling left high and dry once they move out and start to have big responsibilities.

Even young people can be taught the basics of money - saving and spending - and there are a few ways you can teach them this effectively and in a way they will understand.

Help them visualize their savings: use a clear container

We all love an old school piggy bank, especially the nostalgia it brings back for you as a parent. The problem is, you can't see your savings and be reminded that you're working towards a goal. Adults and kids are similar in this sense, we often have to visually see something in order to be reminded that it's there or that we're actively working towards a goal. The difference is this is especially more important with young kids.

In order to effectively teach them goal setting and saving habits, get a clear container or jar for them to put change in - but don't just let it sit, make it a big deal to celebrate their savings growing and show them how their money "grows" the more they add to it.

Be the money habit example

This one might be a hard pill to swallow, but it's true y'all. You need to be setting a clear example for your kids, they recognize when you're telling them one thing but doing something entirely different. Talk to them about your strategy for growing your savings, budgeting, and how you make financial decisions - in a way they understand.

Sometimes you have to be the bad guy:

The old habit of when your kid(s) ask to go to McDonalds and you say "we have food at home" - don't just leave it at that. This is a perfect opportunity to explain to them that you spent money at the store to get food, and when building up a savings it sometimes means making the decision to save the $15 to $20 you'd spend getting a burger and instead put it towards a family trip or Christmas.

Talk to them and teach them why you make the decisions you do when it comes to money, they learn quickly and will pick up on that.

Show them what spending money looks like

This is where that clear savings jar comes in handy. When you go out to the store, have them bring some of their savings with them, now when they say they want a pack of gum, or a small toy, help them pull out the money needed to pay for it. But also have them give the money to the cashier or put it in the self checkout.

This is a way to have them make the connection between physically handing over the money to buy that ONE item and how much of their savings they had to use. Not only is this a great experience for them but it will also help them understand when you tell them no to something and follow it up with "you can start putting money in your savings to buy it later, I can help you."

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Teaching older kids and teens about money

You can classify this category as easier or MUCH harder - depending on your outlook. However, this is why educating your kids when they are younger is important, it makes this stage a lot easier - but when starting from scratch at this stage, teaching kids about their own money can be complicated. Here are some tips.

Show them the opportunity costs

Older kids and teens start to understand that patience and earning money take work, but it pays off. In order to teach them this, you can start pointing out to them when they may want to rethink their decision, or giving them friendly reminders that if they want to buy this now, they won't have money to buy Y later.

Often money can start to burn a hole in kids pockets and it can be difficult for them to recognize when they may want to rethink a spending decision. You can serve as that friendly reminder when the time comes.

Reframe allowance into commission

When you work on commission, you get a certain compensation for the WORK you do - the same concept can be paramount for kids learning to save money. Just giving them a certain amount each month doesn't teach them to work for their money and earn it properly, but it also gives them the impression that money is not earned.

Don't break your own bank account

Now, each parent's situation is different, the commission you give your kids for their work doesn't have to be a large amount - any reasonable amount they get will show them that hard work really does pay off.

When giving your kids commission for their work, you don't want to be draining your own bank account in the process - so it may be important to set boundaries and standards, sort of like commission caps, to ensure you're still able to meet your financial goals and needs while still helping them learn.

Squash the impulse buys

Teens especially are fantastic at capitalizing on opportunity, and this includes impulse buys. You can do a few things in the case of an impulse buy scenario, and it might be beneficial to do both! Tell them they can buy the item with their commission earnings, but suggest that they wait a day and think about it - especially if it's over $15.

This teaches patience as well as really thinking about a purchase. The item they want will more than likely still be there later and they may even forget about the item entirely. Think of how many times you've seen something in a store, bought it, then forgot you bought it 3 days later - adults are subject to the same ailment as kids.

Teaching high schoolers and older teens about money

This is the stage that you can start to drill home responsibility and give them a bit of freedom while still reigning in their impulsivity. Unfortunately, in today's world, social media makes this stage challenging, but there are ways to get through it.

Stress the importance of contentment

Teenagers talk and they're going to be telling you all the things their friends got, or what their parents spend money on, etc. But it's important at this stage to teach contentment and being happy, blessed and grateful with what you have.

It's important when teaching teens to express that you can still have fun outings or spend money without overspending. Social media and friends will likely be a huge influence on their financial situation, but hammering home that spending should be done wisely and consciously will help them grow.

It's time to open a bank account

Now is the time that you put all the knowledge and guidance you've given them to the test. Give them a bit of freedom with a bank account - but don't let them run with it, talk to them about the importance of making investments and budgeting. They can do this with a savings account that has a high-yield to get them used to the concept of investing and building up savings at the same time.

Stress to them the importance of locking away money for college, if that's their plan. It allows them to take out less loans for college and have more cash on hand once they graduate without being held back by student loans.

Educating them on using a credit card

No matter what, having a credit card is bad news. Teaching your kids this as early as possible will save them so much time in the long run and issues later. Paying down a credit card can be extremely daunting and can rack up quickly.

If you can ingrain in them the biggest personal finance lesson, it's avoiding any and all kinds of debt as much as possible. Teaching them about money habits and healthy money behavior can only go so far if you don't express to them the dangers and complications that come with debt.

What you really want to teach them is how to budget, earn money, and save so that they can build a wealthy future for themselves without being tied down.

Let's Recap

Raising kids is no easy feat, and when finances are involved it can complicate matters. But nonetheless, it's so incredibly important to start teaching about money early and how it impacts various aspects of how your kids will live. Teaching kids about money is teaching them about personal finance, saving, spending, budgeting, making investments, and overall having good habits.

The sooner you start this process the easier it gets and the better off your children will be when they reach their teen years and start working. Most teens have a bad handle on money because they aren't taught how to manage it correctly. You can help your kid build a life of wealth and success by teaching them these concepts early and watching them grow.

I’m so grateful that God has placed this mission in my heart to help others reach their goal of mental, spiritual and financial freedom. I went from being 19, and $35,000 in debt, to a #1 National bestselling author, course creator, host, speaker, and educator! My debt-free life is full of purpose and possibility. I want the same for you and more! My mission is to give you the resources, tools and information you need to get started!

I’m proud of you for taking the first step!

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