We all dream that the carefree little people we’re raising will one day become responsible adults. And not just any responsible adults. Financially responsible adults. But with so many grown-ups struggling to develop a healthy relationship with money, how can we possibly teach such a complex concept like money management to our kids in a way that they’ll understand? Teaching fiscal responsibility early helps set children up for a healthy relationship with money down the road, and the good news is that it’s easier to do than you think.
6 Ways Kids Can Have a Healthy Relationship with Money – Even if You Don’t
1. Simplify it by teaching money management without money.
With coins and bills and addition and subtraction, money is a great way to teach math. But for the youngest kids, that’s far too complicated. Start to introduce the concepts of saving and spending with cotton balls in a glass jar. If a child “earns” money, place a cotton ball in the jar. Make marks on the jar denoting what type of toy they can “buy” once they fill the jar up to that point. If they fill the jar halfway they can get a small toy; if they wait until the jar is full they can get something bigger.
2. Teach your child that money is earned through work.
Give your child opportunities to earn money. Make a list of things they can do around the house and pay them (or, give them cotton balls) after they’ve completed those tasks. Make sure that there are unpaid tasks they’re expected to do simply because they’re a part of your household, but give them paid work opportunities on top of that. Children will learn that money is not an entitlement – it must be earned – and they’ll also feel the pride of a job well done.
3. Talk about money openly and connect it to your everyday life.
Money is an integral part of life – demystify it by talking about it openly and matter-of-factly. Remove emotion from the conversation and simply equate money with choices: “If we spend too much money on toys, we might not have enough to buy gas for the car later!” Don’t scare kids or give them more information than they need, but simply reinforce that life involves many money-related decisions.
If you have a child who becomes concerned or overly worried about your financial situation, simply remind them that they don’t have to. “It’s not your job to worry about money. Your dad and I take care of our money and make choices, so you will always have a place to live and food to eat.”
Sometimes, because of the sensitive nature of money (and children), we tend to avoid these difficult topics. That’s a mistake. Just make sure you talk about them openly, and with a healthy dose of reassurance for the anxious child.
4. Use money as a natural consequence when appropriate.
What happens when you, an adult, break your phone? You have to buy a new one. Don’t take a child’s money away as a punishment for misbehavior – but if appropriate, use it to help children understand the natural consequences of their negative choices. If they are careless and break their sister’s toy, have them buy her a new one (or pay in cotton balls). If they break something on purpose, make them work to earn money, and then have them pay you back. Let them see and feel the money coming and going from their possession to reinforce the weight of the consequence.
5. Give them gift cards.
Gift cards are the lame cop-out present when you’re a grown-up. But they’re a great tool for kids to learn money management. Consider giving them gift cards for their birthday, then help them navigate the local toy store to find something they’d like. Guide them, but let them make their own choices – and even mistakes – in their final selection. After all, don’t we all learn best from our mistakes? And what better time to learn when the stakes are low and they’re still a kid?
6. Foster generosity.
A healthy relationship with money isn’t just about being able to manage what you have for personal gain. It’s also about using your money to help others. Find opportunities to teach your child about generosity – whether that means using some of their money to buy a toy for their sibling, or letting them participate as you buy food for a food drive.
While our personal relationship with money may be complicated, effectively teaching it to children doesn’t have to be. Whether you live comfortably or struggle to make ends meet, all it takes are a few simple strategies to lay the foundation for your kids to grow up to be financially savvy adults.
Jenny is just another mom trying to do her best. She loves making lists and helping others find what they are looking for. When she’s not chasing after her two kids, she enjoys writing useful guides about her experiences with breast pumping and trying to save money on baby gear. You can also find her sharing the latest parenting hacks and tips on Pinterest.