Are you struggling with how to talk to your kids about money? Here are three things to try this week with your school-age child that will help open the door to financial learning.
Practice Spending Finite Money
One of the most important skills needed for budgeting is the ability to take finite income and allocate it in such a way that all needs are met. It’s something kids of all ages can practice long before they have jobs and living expenses. Give your children a set amount of money and have them plan dinner one night this week. Help them find a recipe they like, write down the ingredients, and see how much everything costs. Younger children might need your help with the math, while older children can do this independently.
Then, find more opportunities to practice this skill. Is it Grandma’s birthday? Give children a budget and have them search for something within that budget. Road trip? Give them a souvenir budget that doesn’t magically replenish if they spend it all the first day.
Find Money Earning Opportunities
It’s important for kids to practice setting savings goals, but difficult for them to follow through on those goals if they aren’t actually earning money. High school students have part-time jobs, but what about younger kids? How can they earn money? That’s up to you. There are several parenting philosophies, and none of them are wrong. Some parents choose to give their children an allowance for doing household chores. Some parents want chores to be a regular part of life, but offer earning opportunities for extra work, like organizing or deep cleaning. This week, brainstorm as a family what types of earning opportunities are age appropriate and in alignment with your parenting style.
Model Opportunity Cost
Finally, you are one of your children’s most influential role models when it comes to financial habits. It’s easy to see a parent spend, harder to see a parent save, and nearly impossible to see what a parent didn’t spend. All spending has an opportunity cost. If I spend money on X, that means I’m giving up Y. Model that process for your children. The next time you see something you want to buy, but decide not to, vocalize that process. “I really want to buy this right now, but I’m choosing not to because saving for XYZ is more important.” Kids don’t get to have everything they want, and it’s important to show that adults don’t either.Remember, money isn’t meant to be a topic that’s discussed once and then forgotten. It’s important to highlight financial topics as they naturally occur in daily life. These small financial interactions and conversations will be the foundation of your children’s money skills and habits as they grow up and become adults.