Raising Money Conscious Children is Easier Than You Think

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Some parents find it uncomfortable or unnecessary to speak frankly with their children about money; however, quite the opposite is true. The younger children are when they learn the importance of money and how it’s made, the better.

Think back on your experiences with money as a child and how they helped form your current “money mentality.” Are there things that you wish your parents had done differently with you? Perhaps your parents led by a great example and gave you a head start on the successful way you handle money today. Either way, it’s important to note that, as parents (or other significant adults in a child’s life) you can teach your children some very important financial lessons.

It’s easy to see by simply taking quick stock of the number of foreclosures and bankruptcies in recent years, that many adults don’t have a good handle on managing their money. That fact makes it all the more important to ensure that the next generation of children don’t make the same mistakes their parents did.

Although it may be tempting to want to give your child everything that you didn’t have, it’s crucial to tamp down that urge. Your influence over your child’s financial choices is powerful, and children will learn by the example that you lead and by the lessons that you teach.

How Can I Teach a Child the Value of Money?

As early as age 4-5, children have the ability to learn to wait. At this age range, the money lessons taught should be simple, and focused on the importance of waiting for things in life. Children this young won’t have a secure grasp on how money works yet, but they can and do learn quickly that they can’t always get what they want. In order to teach your child this lesson, reinforce the skills of patience and understanding that “good things come to those who wait.”

Around age 6-7, children gain the ability to manage their own money. It is at this age that you can begin giving your child an age-appropriate weekly allowance (in the amount of your choice) in exchange for work done around the house. At the same time, discuss the concept of saving and include your child in some of the financial choices you make for your household. School age children can learn a lot from a routine shopping trip with you. Lead by example as you shop for your family’s necessities. Practice thinking out loud as you make purchases so that your child can hear your inner dialogue and can begin to learn how you make wise purchasing decisions.

Once children reach the age of 9-10 and older, they will have the cognitive ability to grasp the concept of how banking works, including simple and compounded interest. While up to now they may have had difficulty with the idea of “off-site” savings (i.e. not in the piggy bank on the kitchen table) – early adolescence is an ideal time to introduce children to their own bank account.

Leading your children toward good financial futures will benefit you, as well. By attempting to set a good example, you’ll be more inclined to make better money decisions. Naturally, we all make poor purchasing choices from time to time, but your mistakes can also be teachable moments about warranties, saving receipts, and returning defective items.

 

 

Image credit: Carissa Rogers

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