As parents, we want to support our children to learn basic skills that help them be successful in school and in their relationships with others. Yet we often forget that financial literacy is one of the life skills children need as well. Understanding how to help children learn financial responsibility can feel daunting. Myriad books, programs, and chore charts are available, but they're often too complicated or time consuming for families to stick with. Relax. The most important thing you can do to teach your child financial literacy is to get your own financial house in order. As you develop sound priorities for earning and using money, you'll naturally share those values with your children.
Teach these lessons through example, natural conversations, and day-to-day life experiences. Chore charts and systems can provide structure, but make sure they're easy to understand and implement.
Money Lessons to Teach Your Children
- Embrace work. With the exception of a few lucky trust fund babies, most of us must work to provide life's necessities for our families. Helping your children come to view work as a necessary, healthy, and satisfying part of life is one of the greatest gifts you can give them. First, set a good example. Do you find fulfillment in your work? Do you do your very best and take pride in a job well-done? Are you honest with your employer? Your own attitudes about work are bound to rub off on your children. Next, spend time working together as a family. Rake leaves or clean the house together. When you're done, do something fun together. Adopt the motto, "We work together so we can play together." Finally, consider paying your child for at least some chores around the house. Children can be expected to put away their own laundry and clean their rooms simply because these responsibilities are part of taking care of oneself. They should also pitch in when asked to set the table, unload the dishwasher, take out the trash, or otherwise help with daily tasks. It's okay to pay children, though, depending on your family's values and situations, for doing extra chores, which helps children understand that if they want money, they must work. Keep it clear and simple so children understand exactly what you expect. Pay them quickly for their efforts.
- Show how to use money wisely. If you opt to pay your child for doing extra chores (which is different than allowance), it makes sense to teach them how to use that money wisely. First, help your children divide their earnings into three categories: giving, saving, and spending. For young children, the exact percentages in each category are not as important as consistently teaching this habit. Set predetermined percentages with older children and help them set goals for how they want to use their money. Open checking and savings accounts and teach them how these accounts work. Talk with your children about the dangers of debt and avoid debt yourself. Help your children see the benefits of avoiding debt, such as less stress and greater financial peace; an increased capacity to invest for the future; and more available resources for giving and serving.
- Live within your means. We live in a culture that seems to promote consumerism and entitlement, but these values do not lead to personal happiness or financial success. Help your children understand that money is merely a tool, not an indicator of personal worth. De-emphasizing activities such as shopping in favor of meaningful time spent together can help improve your child's self-control. Play board games, go hiking, read books, or watch family movies together. Volunteer at an animal shelter or hospital. At the same time, set a budget and review it every month. Let your children see you and your partner setting financial goals and making plans together. Help your children understand your goals and don't be afraid to say the words, "We can't afford it." Teach your children to categorize purchases as "needs" or "wants." Make a family guideline that "we take care of needs first and consider 'wants' carefully before making a purchase."
That's it. Three simple lessons that can help your children avoid financial pitfalls, make wise money choices, and become financially responsible. As you teach your children about money, consider your children's developmental needs, offering bite-size lessons that build upon each other over time. And remember, money is a tool that not only allows us to enjoy life and provide the necessities for our families. When used wisely, this tool can also allow us to give generously and change the lives of others for good.
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