Would you believe I won "Highest Balance" for 3 weeks in a row in my 5th grade Budgeting & Banking class? Or that at 13, I'd saved enough babysitting money to buy an Epilady? What had my parents taught me about money? Are they responsible for the money geek that I've become? Maybe.
So, how DO you teach your kids about money? Here are a few ideas to get you started-
Teach By Example
First, know your own money personality. Are you a spender or a saver? Do discussions about money scare you or excite you? Knowing your own assumptions about money will help you teach your kids. Plus, it will keep you honest. It’s hard to teach your kids that saving is important if they see you spend your very last dime on a whim.
Teach Through Discussion
Play Life - Sounds corny, but playing The Game of Life has prompted many financial discussions with my kiddos. What have they learned? Don’t skip buying insurance so you can be safe on, “Your house was knocked down by a tornado.” Having a car-load of kids seems fun until you land on, “Pay $5000 to the Teacher for each child.” For good or bad, they always try to land on the Trade Salary spaces so they can swap each other for the higher salary card. Sure you may land on “Win the Lottery” but you get a “LIFE” card for graduating from college and buying a house and lots of regular activities. Only at the end do you see the hidden value these normal activities add to your Grand Total.
Teach By Experience
Make It Fun
My daughter asked for a coin sorter for her 5th birthday. We picked out a hand-crank model and have spent hours dumping out the piggy banks. She loves seeing the coins sort into piles. You’ll find no spare change lying around our house. Sorting money is great entertainment, plus they see how fast little coins add up to big bucks.
What are some of the lessons we’ve tried teaching in our house? Have an Abundant Mentality, Have a Goal, Look for Value, and Money Has Trade-offs.
Have an Abundant Mentality
For me, I want my kids to believe that they will always have more than they can need, want or use, and that the feeling they gain by sharing with others is worth more than anything they’ve given away. How do we teach that?
One day, we were in the drive-through line about to order dinner. I suggested that instead of ordering our regular combo meals, we just order the less-expensive entrées . Then, since we hadn’t spent ALL of our dinner money, we could surprise the car behind us by paying for their order. Taking a little less for ourselves and sharing our extra with others – My kids thought it was so cool and I now I see them trying to think of ways to give on their own.
Have a Goal
My kids have at least 3 piggy banks each. One bank is for giving, one is for saving and one is for spending. We post up pictures of what the goal is for each bank. We decorate Tootsie Roll banks for the Spending bank. It always looks like you have SO MUCH money when it’s crammed into that little jar! Goals can make money into something tangible.
Look for Value
Do your kids know how to identify value? When we’re grocery shopping, I’ll ask, “Do you think this is worth the price?” My daughter is so accustomed to me using a coupon, she thinks I’m not allowed to buy something unless it’s on sale. I’m not trying to make her a cheapskate. It’s more about being able to evaluate a name brand and store brand can of pears. Is there really a difference in quality or price? Which is more important?
Money Has Trade-offs
I like my kids to know money has an opportunity cost or in other words, it comes with trade-offs. Since most things they want fall into the “Postpone-able Purchase” category, you’ll hear me ask, “What if you find something you like more and you’ve already spent your money?”
Choices don’t always have to be mutually exclusive. The choice could be “Now or Later” as in, “If you really want X, let’s wait a day and if you still really want it, we can come back and get it.”
So when we’re at Costco and I see the Downtown Abbey book, I pick it up, show my daughter, tell her I don’t think I should spend the extra $22 and I put it back. Then three steps later, I see Season 2 DVD. I stop, pick it up, consider, then add it to the cart. Just two steps later, I turn around and make my daughter put it back. I proudly announce, “If I really want it, I can get it next time we’re at Costco.”
Guess what the first thing she told my husband when we got home?