1. Talk to your kids about all the ways you can pay.
People don’t like to talk about money, but you must discuss it with your children even at a young age. You kids see you buying groceries and other things at the store, but they might not understand how it all works. For example, you might use your debit card to pay for groceries, a smartphone to pay for gas, and cash to buy a coffee. Unless you explain that those transactions are all coming out of the same pot, they aren’t going to understand.
2. Look for teachable moments when you watch TV.
There are a lot of money lessons that show up when you watch TV. Start by talking about the financial decisions the characters make and what things are and are not realistic. For example, a lot of TV characters live in homes they wouldn’t be able to afford. Point that out so your child has a realistic expectation about the value of a dollar.
3. Explain impulse buys.
If your child has their own money from an allowance of birthday, it presents a perfect opportunity to teach about buyer’s remorse. When they buy something, save the receipt. Then, a few weeks later, go over the receipt. Ask if they’re still happy they bought that toy? Do they still play with it? What else could they have gotten with that money? This is a great way to teach them to be more mindful of where their money goes.
4. Talk about big purchases.
Kids hear everything. If you have been talking about buying a new car, moving to a new house, or taking a vacation, talk to them about how you’re paying for it. Have you been saving for it for a long time? Are you using a tax refund to cover the cost? How much does the purchase mean to you? Talk about how you decided to make the purchase and how much it means to you. This is particularly effective if it’s something you’ve been saving a long time for.
5. Show them the value of a dollar.
Visual learning can have quite an impact on a young child. Just seeing the money they have can help them understand the value. One simple thing you can do is use a large mason jar instead of a piggy bank so they can watch their coins pile up.
Or, you can go the metaphorical route. Place a bucket in the sink and explain that the bucket represents the bank, the spigot represents work, and the water is money. When you go to work (turn on the sink) the bucket fills with water and the bank fills with money. If you spill the bucket, the water is gone and you have to go back to work again to get more.
6. Encourage your kids to get jobs when they are old enough.
Whether it’s babysitting, mowing lawns, or bagging groceries at the local grocery store, it’s a good idea to encourage younger and older teenagers to start working and making their own money. Not only will they learn valuable lessons about work and finances, but they’ll also appreciate the work that you do and the money that goes into the family budget.
7. Introduce the idea of opportunity costs.
Opportunity costs are something that not a lot of people talk about, but we must start. It’s the understanding that buying one thing may prevent you from buying something else. For example, if your child has been saying that they are saving up for a smartphone, but they see a video game they want and are thinking about buying, talk to them about how buying the video game will mean they have to wait longer and save more for the smartphone.
8. Play a game.
Board Games can teach your kids a lot about money. They give a sense of the world and the rules that you have to follow to win and get ahead. Monopoly and Life are classics, but there are plenty of modern board games out there that have the same effect.
9. Make saving a family affair.
Does your family collectively want a bigger TV, a new computer, or a gaming system? Is there a big vacation you’ve all been wanting to take?
Set up a joint savings account that everyone can access, dedicated to funding whatever major purchase your family agrees on together. You can also put out a big mason jar where everyone can contribute money as they have it and watch the savings grow together.
Even if your children aren’t able to contribute much, they will still see you and your partner working together to reach a financial goal and understand a little more about delayed gratification and the benefits of saving.
10. Collect coins.
Most people don’t collect coins anymore, but it’s a worthwhile hobby and a great segway into history and hope the value of things changes over time. It’s also a good way to explain that people didn’t always use debit cards.
11. Help them open their bank account.
This is especially helpful if your child has a job, but even if they don’t, a bank account is a great place to stash birthday money and other cash gifts. Help them monitor the balance and show them how to deposit and withdraw. If you link their account to your own, you can closely monitor their spending.
12. Teach them the right way to use credit cards.
Credit cards are useful in certain situations, but only when used correctly. If you don’t show your kids the right way to use them, they can set themselves up for years of financial trouble. You should have this talk before they’re ready to begin using one.
If you have an older child that you believe is ready, you can add them as an authorized user on one of your cards. This allows you to monitor your child’s spending and helps them build their credit profile. You will personally be responsible for making the payments on time every month, but have your child give you money to cover the cost of what they’re spending. Otherwise, they aren’t learning anything.
13. Introduce the basic concepts of investing.
Explaining the difference between investing and saving can help kids learn at a young age the importance of investing to build wealth later in life. Open up a spreadsheet and show them how much a $500 investment in their teenage years will grow over time as well as what happens if they contribute to it every year.
14. Encourage giving.
You could encourage your kids to donate some of their own money to charity, but if they don’t see the benefit or don’t have that much to give, have them choose a charity with you and donate some of your own money.
If that’s not financially doable, that’s okay! What’s important is that you give back to your community in some way. You could donate blood, volunteer for a community clean up, or join a fundraising event for a local charity. Just make sure you do it together.
15. Teach them how to budget.
Sit down and create a monthly budget together that includes their monthly expenses and expenditures. They may not have many financial obligations, but it helps to start them thinking about money management early. Review it every month or quarterly to make sure they’re staying on track.
As your child gets older and has more income, you can give them more financial responsibilities. Ask them to pay for or contribute to a portion of their cell phone bill or car insurance. You can also encourage them to begin saving for college or a larger purchase, like a car.
16. Teach your kids how to shop.
If your teenager has been saving up for something and you’re going to buy it online, let them do it with you so they learn what they can about the whole experience. Do it together, and make sure you explain things like why there’s a security code on the back of your credit card, how to choose between shipping options and the value of coupon codes.
17. Share your own mistakes.
If you made some of your own financial mistakes, share those stories with your children. Whether you ran up a lot of credit card debt in college or took out a predatory payday loan, mention those things to your children.
Tell them over and over again, too. When you drive past a payday loan place, repeat the story about how much it cost you in interest. If you see a car dealer, tell them about the time you took out a seven-year car loan. When credit card commercials come on TV, remind them again about how irresponsible you were with your credit cards when you were young.
It may be hard to admit these mistakes, but it’s a good way to get your kids to understand that the advice you’re giving them resulted from lessons you learned in your own life. It might seem like they’re not listening, but they are. Trust that at least some of what you’re saying is getting in.