Being responsible with money is hard. Not just for kids, but for everyone. But what is the reason for that? Well, that is most likely very individual to every person, but when and where do we even learn how to be reasonable with money? Some people have to learn the hard way. And you probably do not want your kids to go through that. We have created a list of things you can do to help your kid to be responsible with money, so hopefully, they can take that mindset with them into their adult lives.
Five tips on teaching your kids about money
Here is our list of five tips that we have regarding kids and money.
1. It does not matter when or if you want to give your kid pocket money, they will get into contact with money sooner or later. It probably will not take long until Grandpa (or whoever in your family it might be) is going to slip your kid some money and that is where you can already start teaching your kid about money! Let’s say your child got $20. You could then explain the options that they have with that money and let them decide – to spend the money on something special, to save it, or to donate it. Your kid could also divide the money for saving, spending, and donating.
2. Do not buy your child everything that they would like to have! Kids tend to get excited in a store and want everything so badly. But we all know, as soon as we get home some of those things might become uninteresting immediately. Also, buying everything that they want makes them think that money is just always going to be there.
3. Explain to your kids how money works and where it comes from. Even if they are little, you could explain your job and that you make money with that. And if you would stop going to work, there might be financial issues. To show them that making money is hard, you could have certain chores that they get money for. Of course, they should unload the dishwasher for free to contribute to the household, but you could let them do other things and pay them for it.
4. If your child really wants a specific new toy but is nowhere near a birthday or Christmas, you could use that to explain money. You could print out a photo of the toy and put it next to their piggy bank, so they have a goal to save their pocket money (or chore money) for it. This will also make them rethink if they actually want the toy and then show them that it is work to save up money.
5. This might be a really hard one: set a good example. If you make a lot of impulse choices when buying things and your kid sees this, your kid might pick up this habit from you. It is okay to check yourself and see how you are doing with money. Of course, you are working for your money, you should be able to do whatever you want with that. But if your child is with you, just make sure to be aware of how you handle money and also how you talk about money.
Saving, spending, donating?
We have mentioned the concept of saving, spending, and donating when talking to your child about money that they own. It makes sense to get your child familiar with those three concepts. Saving and spending are probably very self-explanatory. Because if your kid has both options and never chooses to save, you could talk about that, and then you could explain why saving makes sense. You could explain the why with the following statements:
- If you save money now and then you see a toy that you really want, you already have the money to buy it.
- Is there anything you would really like to have? If yes, you should save for that, shouldn’t you?
- It is fun to spend money, isn’t it? It is good to have some money in your piggy bank for when you want to buy something but are out of money.
Giving your kid the option to donate might feel silly to you because it might only be about an amount of five dollars. But even donating five bucks will make your child feel good and also give them an awareness for people who are suffering and who need help. It will teach your kid to be empathetic and to appreciate all they have a little bit more. It is good to give (when you can) and teaching your kid that early is a great thing!
How much pocket money is appropriate?
Pocket money is a tough thing and there is no standard answer on how much money would be appropriate to give a kid at what age. It should be matched to your income. It does not make sense to give your kid 20% of your income, just so it has a lot of money to show off with. It should be an amount that does not overwhelm the child, that is age-appropriate, and also that is not putting you into a financial crisis.
Let’s get this started
We know that you can do this! It is already such a great effort that you are even reading this. We are sure that you can teach your child a reasonable way to handle money.