Helping Children Understand Finances
An early introduction to finances and money may help your child to understand those concepts better later in life. Here are a few quick tips to help your children get a better understanding of money as a whole.
Money Must Be Earned
When I told my kids how much I made, my father thought I was insane. It was not something we talked about when I was growing up. However, by telling my children how much I made per hour, I was able to show them how valuable money is. For instance, if I earned $10 an hour, instead of telling them that a toy was $30, I said it was three hours of work for me.
You Have to Make Choices
Make it clear to your child that every time you chose to spend money on something, it means you cannot spend it on something else. For instance, “We could stop for ice cream now, but that means that we will not be able to buy any popcorn when we get to the movie.”
Needs vs. Wants
Around the age of five children begin to learn the difference between things they need and the things they want. I know adults who do not have this principle down, so be patient with your children here. However, when your child asks for something, lead them through a series of questions to determine if they think it is something they need or something they want. I.E., How will this thing affect your life if you do not have it tomorrow?
Start Them on an Allowance
Once your children understand the importance of chores as a contribution to the household, implement an allowance system to gradually introduce them to budgeting their money. You will find that a child is much less likely to spend $5 that they have earned than the $5 that is just handed to them.
Involve Them in Your Finances
No, your child does not need to know how much your mortgage is or when the gas bill is due but letting them help you make price comparisons at the grocery store or make a deposit into your savings account allows your child see that smart spending is a part of everyday life. It normalizes financially secure behavior instead of making it a daunting task later on.
Connected Mommy, Mary, is a Birmingham-native mommy of two. She enjoys arts, music, and food of all kinds. She loves her city and all of the wonderful parts of it that make it so unique. When she isn’t working at Drummond Company, you can normally find her at a community theater watching her son rehearse or finding adventures to experience with her children.