Parents have the primary responsibility for teaching children about money since few schools teach this vital subject. The better their financial education is before they leave home, the more likely they will be financially successful as adults. Even if parents don’t explicitly teach sound financial values, children learn by watching and doing. So are they learning the right values? Children can learn different values at different ages and that can begin as soon as they want you to buy them something at a store.
Children’s money skills are different, and inevitably you will notice that some spend or save more, just as adults do. Regardless of which category your children are in, keep working on their sound financial values as they grow. Financial values children can keep learning at any age include that money is limited for both the family and themselves, and that both the family and they need to establish priorities with their needs and wants. Each can set goals and save towards meeting it, whether it is the family for a vacation or themselves for a new toy, computer game, MP3 player, or used car. At times you may wish to encourage the goal by matching funds or sharing expenses.
Remember that these values are learned not only by handling their own allowances, but also by observing your financial practices including how readily or not parents buy them stuff they want more than they need. Family discussions are useful about the family financial state, how much things cost, how leaving the lights on cost money, how their friends’ families’ financial state may be better or worse than our own, how to shop for bargains, and the necessity to save for goals.
Kids, like all of us, want things, but they haven’t yet learned that money is harder to earn than it is to spend. They should not see you as an unlimited bank. Have them choose between multiple wants. Teach them to be thrifty, wait for sales, compare prices, wait for used games, get books from the library, and prioritize choices. Help them save for a big purchase. Explain why you can’t buy something for them, and don’t give in to whining. When family finances or the economy are bad, explain what this means for both the family’s and children’s spending. Set limits early and don’t be afraid to repeat NO. Giving kids too much is not only expensive, it also inhibits them learning sound financial values early in life. Ensure both parents are using the same game plan and not being played off against each other.