You cannot navigate life successfully without some financial literacy, so it is surprising that kids do not graduate from high school with a better understanding of how to manage their money. The responsibility falls on parents to train children to be financially responsible.
Here are some tips for teaching your children to be wise with their money.
1. Instill delayed gratification
Self-control is one of the most critical characteristics you can pass on to your child. The ability to forego small pleasures now to enjoy greater pleasures later is a crucial discipline—especially when it comes to managing personal finances.
Self-control is one of the most critical characteristics you can pass on to your child.
Some children are naturally inclined to delay gratification. They do not have to be told to eat their vegetables first—they understand that saving what they enjoy for later motivates them to do the stuff they do not like. Other children need help learning this lesson—but every child can learn it.
2. Teach them to save
Money is fun to spend, and it is not until we understand the idea of delayed gratification that we are able to embrace saving it fully. It is important to help kids practice self-control by encouraging them to save.
This means not always buying them what they want—even if you can afford it. It is a matter of working with your child so they can save up and afford it themselves. That way they get to experience the process of working toward something and the reward for achieving it.
3. Have extra chores to earn cash
Some parents offer their child an allowance, and others think it is silly to pay children to do their part in the family. Why not have chores that your children do and offer other jobs that can be done to earn extra money. That way, they learn the value of contributing and how it benefits them to go above and beyond what others expected of them.
4. Teach them to comparison shop
It might seem like a pain to take children grocery shopping, but it is something you regularly do and it can be a goldmine of teaching opportunities. As you choose items, talk to your child about how you make one choice over another.
They get to experience the process of working toward something and the reward for achieving it.
As they get older, you can include them in the decision-making process. Once they are able to discern the price difference of comparable items, it is time to think about how money is saved by buying in larger quantities. Is it cheaper to buy 18 eggs instead of a dozen?
You can also do some searching online together before you shop. Are they things you need cheaper at different stores? Is it cost-effective to go to two stores for your groceries?
5. Reinforce the principles of stewardship
Christians believe that God is the ultimate owner of everything and what we have is ours to manage on his behalf. This concept is called stewardship, and it should drive the way we look at our resources.
Stewardship is much easier to grasp when you are raised to see the world that way, and more importantly when you see it expressed in the example of others. Not only should you teach your child that God owns everything, but they need to see that conviction modeled in your decisions.
When you spend money, talk to your child about how stewardship factors into your decisions. Help them understand that managing God’s resources is top-of-mind in all that you do. When they can see that it is important to you, it will become important to them.
Start Them Early
Do not wait until your child is a teen to start talking to them about money. From the time your child is a toddler, you can model the behaviors and benefits of wise financial practices. As they grow, look for opportunities to teach them the principles they will need to be successful managers of their resources.