Money is an inescapable reality of life–everyone will have to deal with it and succeeding in life requires managing it properly. But unfortunately, healthy money habits aren’t in our DNA like walking or talking–they need to be actively taught or else they’ll never be picked up.
That’s why it’s so vital that as parents, guardians, mentors, or just community members, it’s crucial for us to teach responsible financial habits to the kids around us, starting at a young age. The earlier they learn how to manage money, the more likely they’ll be to live a financially responsible life as they get older and that responsibility starts to carry more weight. But how do we teach kids healthy money habits?
Especially here in the United States, there exists a pervasive stigma around talking about money. After all, just about everyone has at some point heard the old adage about the three things you don’t discuss in polite company, and “money” is right there at the start of it.
The problem is, when we don’t talk about something, our children don’t learn about it–or at least not from us. And that’s troublesome, because when kids don’t learn something from us, they inevitably learn it from someone else, which can lead to misinformation and all the worst sorts of lessons.
So the first step towards teaching your kids smart money habits is by simply being open about finances. You don’t need to hold them on your lap as you pay every single bill, but it’s good practice to be up-front about money, whether it be how much groceries cost, household financial hardships (and successes!), or when a toy is too expensive to afford.
As your kids age, you can even include them in the family budgeting so they can feel both in-the-know and actively part of the financial conversation (just be aware of how you speak, as you don’t want your kids walking away feeling like they’re a financial burden).
For many parents (especially those who may struggle financially themselves), the idea of giving kids an allowance feels like an extravagant privilege–like they’re spoiling their children. But if you have the budget to set aside even $3/week for your child, a weekly allowance can be an awesome opportunity to teach them the basics of responsible money management and help foster a sense of independence.
For starters, an allowance need not be a gift–it can be directly tied to handling chores, going above and beyond their assigned household responsibilities, or helping with the family, which helps instill a sense of value to every dollar they earn. And when they do earn the allowance, you can also help them manage it wisely.
Many parents like to use the “spend/save/share” system, where a child’s allowance is split into three pools: one to spend however they like (and it’s important that you give them the freedom to truly spend it how they want to), one to save for a larger purchase or future expense (a college fund, a new gaming system, a car for when they get their license, etc), and one to set aside for donating to charity or giving to help someone else.
An allowance doesn’t have to just be handing out free money–when utilized wisely, it can teach your child how to save money, educate them on how to budget properly, and give them opportunities to learn the value of a dollar (remember back to the first time you spent money on something that turned out to be totally worthless? It’s an important lesson we all have to learn sometime!).
As much as we try to actively teach our children lessons to better themselves, most kids learn by example–and if the example we set as adults runs counter to the lessons we’re trying to share, they take notice.
The better we model the behavior we want our kids to adopt, the more likely they are to follow along. So if you give your kid an allowance and tell them to save $1/week, but you set aside nothing for savings yourself? They’ll see that. And if you teach your kid never to spend more than they earn, but you aren’t paying back your loans? Guess which one your kid will take the real lesson from. “Do as I say, not as I do” may be a common refrain, but it doesn’t help teach any meaningful life lessons.
The bottom line is that teaching kids financial responsibility means modeling it yourself–and that can often mean breaking our own bad money habits. This is hard, but it’s for the best, for ourselves and our families, and by doing so, we’re passing along the right ideas about money to future generations.
But try as we might to practice healthy spending habits, sometimes those ends simply don’t meet every month and we occasionally need a little help. At Spotloan, our simple online application process can help you qualify for the money you need, even if you have bad credit or need a loan quickly. All you have to do is go fill out our application to see if you qualify, and you could receive a decision within minutes. Fill out our application now!