Parents must instill good personal financial habits in their children. But even though you have the best intentions and try to teach your young children about money and important personal finance habits, you may struggle to get them to listen to you.
My parents did their best to teach me about money management. However, as an adult, I ignored every word of advice and spent my money carelessly without thinking about my future. And by the time I reached my early 20s, I found myself mired in personal debt approaching $20,000.
I want to teach my young son money management lessons that really resonate, but getting him to listen can be a challenge. However, I’ve found some methods to speak to my child about finances that seem to produce results. Here are some ways to teach young children solid personal finance habits:
1. Speak on their level.
By speaking to kids on their level, you engage them and grab their attention. Several ways to do this include:
- Physically get down to their level. This helps them comprehend what you say, and they understand that you really expect them to listen.
- Don’t offer them a 20-minute explanation. Keep important discussions short and to the point.
- Use simple words when relaying important information. You will have to break down your money lessons to your children in simple, easy-to-understand terms.
- Use visuals, if possible, as they can make a real impact when you explain new concepts. Many of the lessons I try to instill in my son take place in a grocery store aisle or in a toy store.
Never yell at your kids when trying to get them to listen. I used to yell occasionally to try to grab my son’s attention, but stopped when I realized it had the opposite effect – he completely shuts me out when I raise my voice. Frankly, I don’t want my adult son yelling at me, so I refrain from shouting.
2. Lead by example.
If you try to teach your children how to spend money wisely, yet you always buy the latest and greatest electronic gadgets, you send your kids the wrong message. Your kids will try to mimic your actions! I firmly believe that kids learn more from actions than from words.
Be sure that your actions match your words. Instead of buying new gadgets right when they become available, tell your children to be patient, and explain that new technology becomes less expensive a year after its market release. Instead of frivolously replacing products that are in working condition with the latest model, explain to your kids that you can wait to make the purchase when you really need it.
3. Reinforce and repeat lessons.
If you thought you taught your child something but realize that they still haven’t grasped the concept, don’t get upset. Children need reinforcement and repetition to learn new ideas and concepts.
Repeat and reinforce your money lessons frequently. Eventually, your kids will understand the money management lessons, and they will remember the lessons as they continue to grow.
4. Empower your children and reward good financial behavior.
Try to financially empower your young children whenever possible. For example, whenever we travel to see my parents, my father always gives my son $5 before we return home. My son gets excited when he receives this money, and he wants to go right to the toy store.
The first time this happened, rather than instruct my son on what he could do with his money, I decided to just observe his activities. We had several discussions about kids saving money, and I wanted to see if he remembered our talks. He shopped carefully, asking me the prices for some of the toys. After a long selection process, he picked out a toy that cost $2, and proudly told me that he would “save the rest for the next time.”
When you empower your children financially, you can determine whether they have grasped your money management lessons. In addition to giving your children some financial freedom, you can also empower them when you reward their good financial behavior. I have told my son many times that he did a great job shopping at the toy store. He might not keep the toy forever, but I hope he always remembers the lesson he learned.
Final Thoughts
Recognizing when to start teaching your kids about money management is an important part of parenting. Teaching them lessons that stay with them is crucial, too.
Speaking to your young children on their level, leading by example, reinforcing good behavior, and empowering and rewarding your children has worked for my family. Try using these tips to talk to your children about money, and you might find that they retain the information, and grow up with a strong understanding of the importance of saving.
How do you get your children to listen? What are important money management lessons you share with your kids? Leave a comment below!
This article was written by David Bakke. David lives in Atlanta and is a parent of a young son. He contributes on Money Crashers Personal Finance, giving tips for saving money, getting out of debt, and accumulating long-term wealth.
Photo by vastateparksstaff
This article is about teaching relatively small children about their money spending. However, what the author call “strategies” are not completely related to financial habits as the title promises. Rather they relate to general parenting skills of communication.
Nevertheless, David showed in his personal example with his child how he taught him be wiser with money. I would like to add some other necessary financial skills, which children can learn from their parents, while they grow up.
1. If the allowance is small, instead of buying cheap quality products, children may be encouraged to save and buy quality product.
2. Children can be advised to keep track on spending by weeks, months, year, so they become more organized and knowing about their budget and trends.
3. When they know their spending limits, they may know how much they can borrow from parents, in advance. This prepares children to be ready for credit cards.
4. Let children make mistakes (while their mistakes are still small). Let them make own decisions.
5. Teach them to borrow wisely and always pay back.
And this list is just a beginning of overall financial intelligence.