Growing up with a strong love for anything and everything related to finance, it wasn’t a huge shock when I decided to enter that world for my career. Even less of a shock? Wanting to make sure I instilled a strong sense of responsibility when it comes to money in my kids! While I still have two young ones who are not quite at the point to really grasp any of the concepts related to what it takes to be smart with money, it’s definitely something I’ve given a lot of thought to. My oldest is 4 1/2, so starting out with small concepts is something that we have begun. He’s definitely learning that everything comes with a price! 🙂 Teaching Kids Responsibility with Money can be a struggle, but it is definitely something that I’m sure we all want our kids to be smart with in their futures. Here are some great ideas to get things rolling and make sure you have a little Warren Buffett running around the house in no time!
1. Lead by Example
There isn’t much that is more important in many of the parenting lessons that we want to instill in our children than leading by example! The same can be said for teaching responsibility with money! When your kids are shopping with you, do your best to pay cash when possible so they can help to count things out. Using a debit card? Have them hang onto the receipt in a safe place and show them how it gets deducted from the money you have in a checking account. Be an open book! I know not much was said about finances in my home as I was growing up, but this is a great way to have your kids see how running a household takes a lot of responsibility and careful planning. Have them help clip coupons and search for good prices at the store WITH you! Better yet, make it a game and see who can find the lowest priced item that you’re shopping for!
2. Don’t cave on the “I want’s”
This one can be difficult! If you’re going to start teaching responsibility, this is a big one! Kids have to learn that just because they want something, doesn’t mean they will always get it. I know that I’m definitely guilty of this, especially if I’m trying to get the kids to behave while we are out and about and need to get things done. I’ll always cave on small items just to keep the peace! But these are the perfect opportunities to start teaching them about money and that there just isn’t enough for every single “want” item that they want to throw in the cart. I know when I tell this to my son, I’ll say something like, “We’ll have money for what you want (and I pick a specific item, like a movie, or matchbox car) in X days. But right now, we have to focus on what we NEED, like food and paying for gas in the car. However, if you’re not a good boy when X gets here, than we won’t be able to get your (item he wants).” This is a perfect lesson that money doesn’t just spring into my wallet at his every whim, and it also has started teaching him that instant gratification on items he may want isn’t going to happen all the time. I also use it as a great tool to discipline him, because if he’s not well-behaved during this “waiting time” all I have to do is remind him of his item he will get in a specific number of days and he’s back to the straight and narrow!
3. Effort = Money
While we haven’t initiated a formal “allowance” in our house yet, it is definitely something we have started working towards, especially with our 4-year-old. Right now, since we’re at the beginning stages, we’re basically doing everything verbally and if something needs to get done that he can help with, we ask him to help. More times than not, we get a stubborn “NO”, but when it’s time for him to ask for something he wants, this is when we start teaching him about effort to earn the things he might want in the future. No effort, no money to buy what his heart desires. And sometimes, he might have to do things for a few days straight. Teaching him patience and that it’s not only OK to wait, but sometimes necessary, is very important. And when we get to a store and he’s had a great few days with helping and he does get a new matchbox car? He gets ONE. He may see five he wants, but now it’s about teaching him what opportunity cost may entail. He can’t afford all five cars and it’s up to him to decide which one he may want over another. And most important… when the money is gone, it’s gone!
4. Boardgames and even phone apps
Who doesn’t love a good board game! I know this family does! Our kids are too young to really understand big concepts that come along with games like Monopoly, but I know I personally LOVED this game when I was a kid. What better way to really feel like you’re figuring out your way in the world than by playing a game like this where you have to use skill and strategy to figure out how to afford the things you want to buy?! There are also a ton of great apps these days for those who like to go the more technologically-saavy route. Check out the great apps for kids when it comes to learning more about money at Best Apps for Kids. This a WONDERFUL resource for different age-appropriate apps that the kids can start learning on today with you right beside them!
5. Save, Spend, and Give Jars
Not only do I want my kids to learn how to be responsible with their money, I also want to teach them different items that are important to think about, such as how to split the money they receive into different categories. The Save, Spend, and Give Jars are the perfect way to do this! My son currently uses his piggy bank evertime he snags a random dollar from Dad or gets some loose change from Grandma and Grandpa. But by using these Free Labels, the kiddos can get a sense of physically seeing WHERE their money is going to! Generally, the common split that I grew up with was 40% Save, 50% Spend, and 10% Give, but you can always change this up depending on what you feel is right for your family. I love the idea of instilling an “Attitude of Gratitude” into my kids’ hearts early and making sure they see firsthand how important it is to save for rainy days, as well as help the people in their world who may be less fortunate than they are.
At its core, learning how to be responsible with money is learning how to be accountable. For older kids, implementing chore charts, planners, and setting realistic expectations on what will and will not be considered items that will go towards an allowance is an important step in teaching accountability. My son does AMAZING with visual aids, so very soon a chart is going to get made that he can see and be responsible for that will be front and center on a wall. I also love the ticket idea for younger ones who aren’t comfortable with money but are slowly learning the art of accountability. Never heard of it? Basically, it goes like this… Buy a roll of tickets like you’d see at the fair or that are used in charity drawings or in arcades. Set different chores around the house to be equal to a number of tickets that they can earn. Once they reach a certain amount of tickets for the week, they earn a certain amount of money, or a certain item that they have been wanting. Kind of like how an arcade makes you save up tickets for larger items, except instead of playing games, the kids are doing chores and helping with the family errands. 🙂
7. Involve them
The best way for kids to learn is to be hands on in all of the fun! Include them in any savings accounts or education funds that they may have and show them how things add up and how interest can compound what they may have saved. It’s a fun way for them to see where their “save jar” in #5 above is actually going! Another great way to get them involved is to start a “pocket change” jar. My husband and I have been doing this since we’ve been married and we always used our extra pocket change for a fun date night or to put towards a vacation we were going on. Now, however, we are going to use the concept for the kids to get a feel of how much pocket change can really add up in the long-term! By adding all of the loose change that is inevitable in our house into a nice, clear jar, the kiddos see that it slowly creeps up and up with all of the coins. My son gets a BIG kick out of taking it to the bank once every few months to see how much it has added up to! Right now since the kids are young and we don’t have a clear family plan on how to use the money that gets added up in the jars, we put the money towards their birthdays. This gives our son a clear goal of WHEN the money will be used, and depending on how much is in it, he can help to look over things he may want. This leads into helping to shop for the best price, check out different stores, and see if there is a way to get it cheaper by making it ourselves. Not everything has to be NEW and we can always go to a thrift store and see if there is something that is similar to what he is looking for, where he’ll get more bang for his buck!
8. Base it on behavior
Until our kids are a little bit older and have a little more independence and freedom in actually handling their money, we have decided that a portion of how we will instill being responsible with money is to base it off of their behavior, particularly for our son. While we expect our son to do certain things around the house because he is a member of our family and we all have to keep things in order, there are always extras that can be done to earn a bit of a “reward”. I don’t expect a lot from him since he’s only 4, but there are a lot of things that he can help out with that I’ll make sure he knows will benefit him in the long-run. On the flip side, he also knows that he may incur some “fines” if he’s not listening or following the rules. While this type of tip may not work for older children, it’s a great way to gear up our kiddos for being responsible for their actions, and in the process incorporate ways that involve money so they see there is effort and consequences.
9. Learning from mistakes
So true story… I was young and was at our County Fair one summer in my hometown. I honestly can’t remember how old I was, but I was with a couple friends and the parentals weren’t with us, so I was definitely old enough to know better! And I got sucked into a game. At the fair. Where they are all impossible to win half the time! And I JUST. COULDN’T. QUIT. playing that silly game until I won the prize I was after. And I lost ALL of the money that I had with me that I had saved up for MONTHS. I was devastated. But even worse? I was scared to death to tell my parents! When it finally came out, I definitely got a stern punishment, but overall, they let it go. Why? Because I had to learn from my mistakes and boy did I! That taught me such a huge lesson that I obviously still hold close to my heart 25 years later. I literally can still feel that shame and embarrassment of that mistake to this day! I still have a hard time shelling out money for anything that isn’t a sure thing, so gambling is pretty much out. Even paying money for side bets and fun friend wagers over sports games is tough for me! All because of that fateful day that my parents let my main punishment be the fact that I had lost all of my money, they weren’t going to hand over more, and I had to spend even more months saving back up to get to where I was. My parents warned me not to spend all of my money that day and told me that once it was gone it was gone, but learning from that mistake was the only way I REALLY understood!
Check out the new Dave Ramsey Book – Smart Money Smart Kids: Raising the Next Generation to Win with Money. Written by him and his daughter, it’s a great book with a lot of wonderful ideas and who knows more about money than Dave Ramsey! It’s definitely given me a lot of food for thought on even more ways to make sure I raise kids who are responsible with money.
As a parent, we worry about everything when it comes to our kids! While money may not be front and center in our minds as we’re busy trying to establish kindness, a gentle heart, and a million other things that we want to make sure they do well with, we also have to make sure we take care of their financial health that can possibly affect their future in a much more negative way than we would like to see. We all want the best for our kids and one way to make sure they strive to be the best that they can be is to teach them how to be responsible with the money they make over their lifetimes. Hopefully these tips will get you started on a road of responsibility with money in your house!
When it comes to teaching kids how to be responsible with money, what are your go-to tricks that help these important lessons sink in? Comment below and let us know! 🙂
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