By Jenni Riley, FPQP™
I’ve been guilty of leaving my children out of conversations relating to money because they are “too young to understand.” But, advertisers are NOT leaving your children out of their discussions and want to use them to influence spending. Kids are making money decisions, spending their allowances, and asking you to spend without even knowing why or how it affects things overall.
Most of what a child learns about money will come from home. If family discussions include topics about spending wisely and earning their money, there is a higher likelihood children will adopt good habits. The moment I understood the need for these discussions was when my daughter asked me to buy her an expensive item while shopping. I told her we didn’t have the money for that right now, and she replied, “Yes, you do, you have your card in your wallet.”
Where to begin?
Money vs. Credit Children need to understand that if you use a credit card, you still must have the money to pay for it and that interest will compound on any balances.
Savings Younger children can be shown how to save up their allowance to make a more significant purchase later instead of blowing through their money on small items that they don’t need.
Money Management Talk about budgets with them. Let them be part of some small decisions like the amount budgeted for entertainment. By engaging children in spending choices, they can see how decisions such as going to a movie twice in a month vs. going to the theme park once can affect the budget.
Demonstrate If you communicate that you don’t have the cash for something frivolous, but they witness you purchasing on credit, you are not leading by example.
Consider talking WITH your kids, not AT them. Make money talk casual and open-ended. Once you make it a lecture, that two-way street now becomes barricaded.
Young kids can understand basic concepts of value. My grandpa used to match any coins I chose not to spend and put in my piggy bank instead. I didn’t realize then that he was teaching me to save.
“You’ve got to tell your money what to do, or it will leave.” –Dave Ramsey
Financial awareness starts at home; you just need to start the conversation.