How to Raise Money-Conscious Kids

There are all kinds of life lessons that parents want to impart to their children. You want them to know that they are loved and that they are capable of giving love. They must learn to respect authority and treat others with kindness, compassion, and tolerance. Confidence and self-esteem should be fostered with frequent encouragement and praise. And obviously, education is essential to their lifelong success. Of course, there are also fundamental skills like cooking, cleaning, and driving that you’ll have to teach them at some point if you want them to grow into independent adults. These are things that all parents think about and worry over. But the area that many parents often neglect is also one of the most important: money handling. Most kids go out into the world with no idea of how balance a checkbook, formulate a budget, get a loan, build good credit, or invest for the future. And in this day and age, letting kids learn these lessons on their own could lead to costly mistakes.

The point is, you need to teach your children about money, and the sooner you start the better chance they’ll have of managing their assets wisely. Of course, many parents don’t have a very good idea of how to handle their own finances, much less teach their kids about money management. So this can be a learning experience for you, as well. Although you can probably figure out the basics, it couldn’t hurt to read up on more complex issues like different forms of investment or how to create a workable budget, a retirement account, or a comprehensive financial plan. But let’s start at the beginning.

Kids can learn about money from a very young age. Even toddlers understand the concept of rewards, and while money may hold little value for them initially, even small kids will find shiny coins appealing (just make sure they’re past the stage where every object goes in the mouth). You can start your lessons simply enough with monetary rewards for chores. Small kids can pick up toys, make their own beds, and even help out in the kitchen (stirring, rinsing dishes, etc.) under supervision. Make a chart with their chores and then reward them with a weekly allowance.

From there you need to start teaching responsible money-handling techniques. So allow them to keep some of the money for spending (on toys and activities) so that they begin to see the connection between working and reaching their goals (with money in the middle of the equation, acting as a bridge between their efforts and their ultimate rewards). Then take your kids to the bank to open savings accounts so that they can see their money start to accumulate. You may even want to have kids choose a charity to donate a percentage of their earnings to each year as a way to include the added lesson of social responsibility.

From there it gets more complicated, to be sure, but you don’t need a degree from the best masters in education or finance program to teach kids about money. While you may want to consider a few online courses for your own benefit, even the top online masters in education programs aren’t necessary to get your kids on track with healthy spending habits. They can learn by example if you know how to manage your own finances. And you can find plenty of books, tutorials, and websites to help you learn about budgeting, investing, and so on before you ever have to impart these lessons to your children.