Here are a few ideas to help children create a healthy relationship with money from a young age.
Honesty & Transparency
Starting from just a few years old, children will start to notice and pick up on things like clothing purchases, grocery shopping and even those Amazon prime deliveries. Having an open and honest discussion about how you are paying for items, such as showing a young child your debit/credit cards or cash, will help them to realize how these items are being purchased and that items don’t just magically appear.
A similar idea goes for when you are at a store and your child wants something; use this great opportunity to discuss where the money comes from. Allowing them to be aware that mommy and daddy work hard and receive paychecks gives them a sense of experience. Use this time to teach your children simple budgeting. By letting your kids know things such as, “we don’t have the money set aside for that item today, so let’s figure out how we can buy it next time”, it teaches them that money doesn’t just appear from thin air. Take the time to show them how they can purchase that item for themselves (Chores! Allowance! See below).
Chores & Allowances
Helping around the house is the easiest (and earliest) way to allow your child to pitch in and start “earning an income”. Creating a chore list and schedule will help manage expectations. Even if it is only helping to dust on Saturdays and feeding the pet throughout the week. Creating extra side opportunities to earn income can help with those bigger ticket items on their wish list.
Providing an allowance, and letting your child make their own spending choices will help to teach budgeting and money management.
Spend Some, Save Some
Having different allowance jars (or for older kids – bank accounts) set up for spending, savings and gifts or donations will be a great visual aid for your kids. Your child will be able to watch and see how their money can grow. This technique also teaches them how we should always set aside money for spending on things other than ourselves. Choosing a percentage and automatically putting that in the ‘Savings’ jar will simply become a habit over time.
Your children will learn to enjoy the independence of using their own money to help pick out something very special for loved one’s birthdays or Christmas presents.
If you are interested in teaching older kids about Budgeting, one really easy way is to set a monetary limit for back to school clothes/supplies shopping and let them oversee what they purchase. They will quickly learn how to stretch a dollar to get everything they want!