How to talk to your kids about money

Our upbringing plays a big part in shaping our relationship with money “because our kids see and do everything that we do,” says financial expert Jen Hemphill.

I would like to pass my passion for personal finance and money onto my kids. I’d like them to balance smart saving with intentional spending, to invest for the future while enjoying what they have. I am sure you do too. But how do you start? And at what age?

Interestingly, research shows that by age 3, your kids can grasp basic money concepts. By age 7, many of their money habits are already set.

It’s important to have conversations about money and even be honest if you’re having some financial issues. If approached correctly and in a way that is age-appropriate, you can use your money troubles as teachable moments. The best thing you can do is to keep discussions about money simple and light in front of the kids

If you don’t teach your kids how to manage money, somebody else will. And that’s not a risk you want to take!

Here are some tips to help teach your child about money:

Use a clear jar to save :

When you use a clear jar, they see the money growing. Yesterday, they had a dollar bill and today, they have a two dollar bills! Talk through this with them and make a big deal about it growing!

Set an example:

Your little ones are always watching you. Set a clear example for them and they will be sure to follow.

Show them that stuff costs money

It is good to act better than to express in words. Ever heard the saying better to show than to tell? Help them grab a few dollars out of their jar, take it with them to the store, and physically hand the money to the cashier. This simple action will have more impact than a five-minute lecture.

Pay them for chores

Don’t just give your kids money. Pay them a wage for chores they do around the house like taking out the trash, cleaning their room, or washing the dishes and then perhaps have a discussion what and how they intend to spend their wages.

Avoid impulse buys

Have you ever stood with your child in a long line at the supermarket and all they did was scream ‘can I have this please’? If you’re like most parents, you have most often than not, given in. Now instead of giving in the next time, ask them to wait or tell them to have a think about it and come back the next day to buy the item. Don’t concede to every request and avoid spoiling your kids.

By learning to wait, he or she is less likely to give in to impulse buying or quick wins, and instead see the value in waiting for even better results down the line. That way they’ll learn to put aside gift money to save up for a dress or a bicycle instead of spending $5 here or $10 there for smaller-priced items he doesn’t even truly want.

Get them saving for college

for older kids, there’s no time like the present to have your teenager start saving for college. Do they plan on working a summer job? Perfect! Take a portion of that (or more) and toss it in a college savings account. Your teenager will feel more fulfilled and responsible as they contribute toward their education.

Have your child create wish lists

Writing lists is an excellent habit to establish now, even in childhood. Your child learns to plan for the future instead of expecting everything they want right away.

Lists help them prioritize and see which items they truly wants. You can help them write lists for special items they would like to have, with the agreement to only buy one or two. These limits force them to avoid instant gratification, like saving enough money or waiting for the holidays.

Lists also teaches them how to save to buy a coveted item or wait for an upcoming event, a skill they will need in adulthood.

Teach them contentment:

It starts with you. Practice gratitude. You can lead the way by setting limits for yourself and, thereby, serve as an example for your child. For example, you can cut down on the number of clothes you buy or the number of fizzy beverages you drink. When your child sees that you set limits for yourself in whatever you do, he will also develop that habit.

By teaching your child/children to be content, you help them resist greed, make wise choices and prepare them to respect nature and its limited resources.