* This post was originally published 2 years ago today.
You may have heard the phrase, “Money doesn’t grow on trees.” You may have even used it yourself, especially when talking to a child. Money is such a complicated concept. Children watch adults use various methods of spending and it is not difficult to see why money is misunderstood. It is made of paper yet it can be traded for valuable items. People need money in order to eat or put a roof over their heads, but not everyone has the same amount. This may or may not be evident to a child. When parents need money, it seems all they really need to do is stick a card in a slot or visit the bank for a fresh supply. These are all truths but, to young minds, can lead to confusion about how money works.
Talk to your children about how much your family spends. I think families are usually so worried about the loose tongues of children, that they choose not to enlighten them about the flow of money in the home. You might not want to give exact amounts, but letting your children know that that trip to the grocery store just cost $180 can be eye-opening.
Give children the opportunity to collect money for future wants and needs. Whether it is through an allowance, birthday money, or a part-time job, children need to learn to grow small amounts of money into larger, more usable amounts.
Help your child learn to budget his or her money. Create funds that your child might like to use to save for the things he/she would like. Give them real responsibilities. Create a system that might include some regular expenses and teach your child to budget for real needs. Give them the practice they need by setting up funds for food/snacks, personal care, entertainment, clothing, gasoline (if they are driving), savings, and charitable giving. Let your child experience some extended freedom by allowing them to choose between the cheaper shampoo and money left over or the trendy shampoo and less to spend elsewhere.
Set up a system that allows them to track their expenses. The 2 most common ways of handling money as a child are either 1) a bank account complete with checkbook and/or a debit card or 2) cash. Either way, money needs to be thoughtfully tracked and attention paid to the unnecessary drains.
Offer not only guidance, but trust and confidence in your child’s growing ability. This one is for my benefit. I have some control issues when it comes to money. It is difficult for me to believe that my children will be able to handle their money appropriately. My task comes down to this: training, training, training of my children and then letting go as I allow them to put they things they’ve learned into practice.
What money methods did you learn from your parents that helped you today? What tactics are you using with your own children to teach them about money?