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9-Ways To Teach Kids About Money

Written by Richard Rosso | Apr 3, 2019

Financial literacy is a grassroots effort that begins at home. Or in the car. Or in the bathroom. With money such a big part of our lives, opportunities to build a child’s financial literacy are all around us.

As a child, I was an observer. My mother existed on welfare and dad lived for the moment. Both died with nothing.

Today, with your children bombarded with messages to spend you need to “sneak” money lessons in whenever possible.

Success comes from changing up old beliefs about how you think you should go “money-active” with the kids.

Perhaps it feels awkward to bring up money seemingly out of the blue. I promise, once you begin, lessons and discussions eventually become a habit that will reap rewards for the little ones you care about the most.

Keep the following nine ways in mind to jump start your process.

  1. YOU’RE THE EXAMPLE WHETHER YOU LIKE IT OR NOT.

Here’s an easy one because you don’t need to say a word – your actions are enough.

You children are monitoring your feelings about finances. What is your outward expression towards debt, savings and general household financial management, especially when communicating with the family?

If your relationship with money is positive or one of control and discipline, your children will learn from the example. If your relationship with money is negative, stressful, extravagant or reckless, the kids will pick up on that, too. Smart money beliefs and actions can lead to smart money imprints by the younger generations around you.

Generally, if you’re a saver your children will be too. According to a www.moneyconfidentkids.com survey from 2017, parents who have three or more types of savings are more likely to have kids who discuss money with them and less likely to have kids who spend money as soon as they get it or lie about their spending.

  1. ANYTIME IS THE RIGHT TIME.

One simple question framed in a positive tone may provide the right spark to get a money conversation underway. I call it “financial curiosity.” And you can be financially curious with your child anywhere – at the mall, at the supermarket, in his or her room. If your teen makes a purchase, inquire about it with sincere interest. Out of non-threatening curiosity I ask my daughter for her reasons behind purchases and services she uses. She never feels like I’m prying (at least I don’t think so).

What compelled your child to buy an item? What does it do? What other choices are available? Is this item something the family may find useful? How does it work? Will this make their lives better, easier, more fun? How so? Was it a challenge to save up? You’ll gain information about the motives behind purchases and discussions regarding other money matters will blossom.

  1. GET KIDS INVOLVED EARLY.

Talking about money is fine, however, it doesn’t compare to having your kids experience money management firsthand – something I call “money active.” Have the kids be responsible for specific money projects, let them fully experience the rewards and feel the sense of accomplishment when the plan is executed.

For example, provide children an opportunity to budget a family vacation or weekend getaway and then all enjoy the fruits of the labor. Partner with them to set savings goals for future purchases, especially the bigger-ticket items. Assist your teens with the research or offer to match a percentage of the purchase price as a reward for good money habits.

Are the products or services the kids are using viable investment prospects? Now open the door to the investing conversation. And what better way to ignite the money flame — a possible investment into a company that manufactures a product or provides a service the children are passionate about.

  1. IT’S OK TO ASK FOR HELP.

So, you’re still having difficulty getting the conversation going? Let someone else help you get the fire started. Seek assistance from an objective person who would be willing to provide money lessons to the kids; perhaps someone in the family, or a friend successful with money management, would be excited to share an experience. Don’t be reluctant to seek assistance and allow someone else to tee up your involvement. I’ve witnessed grandparents do a great job at getting through to the grandkids with stories and financial lessons. Financial advisors could be great resources as teachers. I’ve been mentoring, teaching several clients’ children who are now impressive, fiscally-responsible young adults.

  1. MAKE MONEY REAL.

Be candid. Your kids like to know you’re human, and occasionally make financial mistakes. They also want to understand what you did to correct a money mishap. You may need to be a bit creative; children are accustomed to movies loaded with action and special effects.

Take time to compose a compelling story about how you faced a financial obstacle head on and came out a winner. Or if the story doesn’t end well, explain specifically what you learned.

Kids are very comfortable with technology so become “money active,” and take advantage of online money-management tools to help kids achieve financial success. For example, at www.moneyasyougrow.org there are activities that guide you to help the children work through money milestones grouped by age, beginning at 3-5 year-olds.

  1. PLANT A ‘MONEY MINDSET’ SEED.

Out of each dollar of allowance, figure out how much goes to savings, to charity and to spending. You need to help children establish guidelines early on. There are several products that make this division of money fun. Like the Money Box available from www.Moonjar.com. Also, there is an item called Money Conversations To Go which can jumpstart fun family discussions about money. We discuss Money Conversations To Go on the Lance Roberts Show and always have fun with the topic.

  1. HAVE YOUR KIDS HANDLE COINS (BEFORE THEY GO AWAY & WE ARE COMPLETELY DIGITAL).

It’s a great way to get very young children comfortable with money – When my daughter Haley was 4, I had her handle nickels, dimes and quarters; they were shiny and fascinated her. From an early age I would have her place the coins in a bank and shake it up from time to time. It sounded like a rattle of sorts. Placing the coins in the bank was a sense of accomplishment for her and started her on the road to fiscal success – At age 20, she’s a first-rate saver! She even impresses me.

  1. HOW ABOUT A FUNKY MONEY DIARY?

Purchase a three-subject notebook to help the younger kids keep track of the money they want to spend, share & save. Decorate with stickers related to money or cutouts of items the kids want to purchase in the future. Interactive fun!

  1. TAKE THE DAMN SHAME OUT OF THE TOPIC.

I was never allowed to ask money questions to parents and grandparents. I was quickly shut down. It wasn’t my place and not proper in an old-school Italian family to discuss money. I broke that negative cycle with my daughter. She knows the balance of her 529 and understands the stocks in her brokerage account (we believe the lessons and homework come from understanding fundamentals of stocks). She knows about my life insurance (I’m worth more dead than alive). She’s a thrifty shopper and money topics flow comfortable through our conversations. Something I could never imagine with my parents.

The most memorable interactions with children about money are ones you may overlook.

You’ll find discussing money at different times, in various places.

Out of nowhere.

It’ll become so routine, you’ll be smitten with delight.

Then you can focus on the tough discussions.

Like sex.

Ok, I’ll never be ready for the “S-topic.”


Talk with an Advisor & Planner Today!

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Richard Rosso, MS, CFP, CIMA is the Head of Financial Planning for RIA Advisors. He is also a contributing editor to the “Real Investment Advice” website and published author of “Random Thoughts Of A Money Muse.”  Follow Richard on Twitter.

2019/04/03
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