Teaching kids the value of money can feel like an overwhelming challenge for parents. We may struggle with our own finances or have trouble knowing how or when to talk about such a taboo topic with our kids. T. Rowe Price’s 2015 Parents, Kids & Money Survey revealed that parents’ behaviors are often at odds with their concerns about setting a good financial example for their kids. However, starting them out when they are young can be a fantastic way to get them on the right financial path from an early age and help them live a centsible life.
- Weekly money meetings
As tempting as it is to only talk to your kids when the topic of money comes up, setting aside time for a weekly money meeting will help keep everyone on track. You can dole out allowances, discuss extras chores, upcoming expenses, and even make family financial goals.
Example: We keep a family ‘piggy bank’ and have family savings goals. We started with a swingset in the backyard and eventually saved up several hundred dollars of change and allowances from the kids to go on a family vacation. While the family savings may not entirely cover the cost of something like a trip reaching a certain goal can mean funding the trip or doubling the savings.
- Use everyday situations:
One of the cornerstones of teaching your kids to be savvy with their money is to discuss money openly and honestly as it comes up in real life. For younger kids this starts when they’re in the store asking you to buy something, while it may come up with older kids when you discuss funding a field trip or sports activity.
Example: When my daughter wants to buy lunch at school it is more expensive (and not as healthy) as a packed lunch, so we discussed whether we would cover her costs or she would pay for it herself.
- Let them make mistakes
58% of parents let their kids make bad financial decisions so that they can learn from their own mistakes*
Watching our kids make mistakes can be difficult for any parent, but helping them through tough situations when the financial stakes are low isn’t going to help them make smart choices when the financial stakes are high. Instead, let your kids make mistakes now and teach them how to fix them while the money lost is negligible.
Example: When your teen goes over their data on their cell phone plan come up with a way for them to pay back the difference, and teach them to monitor their phone via text alerts from your carrier. This puts the responsibility on them even if you help them make the payments through chores and help at home such as babysitting or dog walking.
- Be honest
69% of parents discuss their financial mistakes to teach their kids about money*
Whether it’s a layoff or an expensive home repair we all go through challenging times financially. Be honest with your kids and show them how much you’ll need to cut back and why. It’s not always an easy conversation, but it presents a great opportunity to teach them how to deal with tough financial times.
Example: When we cancelled our cable subscription we discussed the cost savings with the kids in real numbers. That extra $100/month can go into our vacation fund to help get us on our next trip that much faster.
- Set an example
82% of parents say they set a good financial example for their kids BUT 40% admit to having a ‘Do as I say, not as I do’ mentality about talking to kids about money*
One of the many reasons I love having kids is that they challenge me to be a better person. One aspect of that is leading by example when it comes to our finances. They see us making smart financial choices and it they have learned to save and be more thoughtful about their purchases because of it.
Example: My 11 year old daughter is obsessed with saving her money. She will rarely use her funds in day-to-day life preferring instead to treat the family to ice cream or spend money on souvenirs on vacation.
- Make it a game
Healthy competition can be a great thing for your kids. Make it fun by challenging your kids to meet their financial goals, save the most, or give the most to a cause. The prize is up to you-maybe just an old trophy that gets passed around to the winner.
- Join us for a Twitter Chat
When: April 15 Twitter Chat at 8:00 pm ET
What: We’ll chat about teaching kids about money. Bring your questions!
Who: Scholastic Parent & Child editors, a certified financial planner that specializes in education, and a group of bloggers including yours truly. 😉
Read more from Scholastic here: http://www.scholastic.com/mck/parents
What ways do you talk to your kids about finances?
Disclosure: This post is sponsored by T. Rowe Price and Scholastic Parent & Child magazine. All opinions are my own.
2015 Parent, Kids and Money Survey: All stats above marked * are from the study.