Top Ten Ways to Teach Your Kids Great Money Habits

Today for Top Ten Tuesday, I’m talking about money and parenting, together! My parents raised me with great fiscal values and I want to pass those on to my kiddos. 
UPDATED: Coincidentally a friend who read this post forwarded me the link for this very similar post with additional awesome ideas from John Lanza at WiseBread.

1. Talk about money as a family. My kids are 2 and 5 and we have already started educating them about money.  My husband and I openly discuss our budget and show them the process of making financial decisions together.  It isn’t always deliberate, but we purposely don’t hide it from them.  Now, if you are in a real financial bind and tend to fight about it a lot, it’s obviously not a good idea to do that in front of you kids. 

2. Don’t buy your kids everything they ask for.  It’s so tempting to want to keep our kids happy by saying “Yes” all the time.  Especially when it’s something small and you have the money to spend.  But they need to be told “No, you don’t need that, that is a waste of money.” or sometimes “No, you will need to save some money and buy that yourself.” Even hearing “No, but you can ask for it for your birthday in a couple months and maybe you’ll get it.” is good now and then.  Self-discipline and sacrifice is important, and they should see you model it as well.

3. Help them save their own money. My kids each have their own piggy banks, and they are encouraged to put their money there for now.  In just a couple years, probably third or fourth grade, I will help them set up a bank account and show them how to save money that way.  The concept of putting off instant gratification now in order to afford something even better in the future is a hugely important value to instill in kids at a VERY young age. 

4. Give them ways to earn some money. There are a lot of mixed opinions about the value of giving kids an allowance, but this isn’t about that.  Allowance shouldn’t be based on chores, most chores should be done with no tangible reward. But once in awhile it’s a great idea to give kids an extra opportunity to earn some of their own cash.  Special projects like cleaning out the garage, weeding the garden, or walking the neighbors dog for a few bucks are great ways to get started at a young age.  I’m a BIG believer in freelance stuff like babysitting and lawnmowing as soon as they are ready, about 13 years old. 

5. Let them spend their own money sometimes.  Seek out periodic opportunities for them to spend a little of their own cash.  Maybe when the ice cream truck comes around, you tell them it’s up to them to see if they have enough money for a popcicle.  If they have been saving for a special toy, make a big deal out of a special trip to the store just for them when they’ve earned enough.  It has a lasting impression on a kid to work towards a reward and be able to buy it themselves.

6. Teach them about credit.  Don’t just let them see you whip out the plastic and sign for everything you buy, without explaining to them that there is money in the bank to back it up.  Play a game with paper money and IOU cards.  Tell them that if you don’t pay the cardholder with actual cash, someone will come and take your purchase back from you.  For goodness sakes, DON’T wait till they are in college to explain the ins and outs of credit to them.  The number one lesson should be, if you don’t have the money in the bank to pay off the card in full when the bill comes, you can’t buy it. 

7. Save for their future and show them the journey. Even if you don’t have much to save, open a 539 education account and put some money in it for your child’s future education.  Then show them, when the statements arrive, how the money is growing (hopefully).  It will help them learn how important college education is to you, and show them how investments work at the same time.

8. Let them help you clip and use coupons. Frugality is a learned value.  Even if you have plenty of money for groceries or dining out, there is no reason not to use coupons.  They can go through circulars and spot the foods and products that you regularly use at home.  They can help you search for the right products at the grocery store.  They can share in your satisfaction when you show them how much money you saved on your receipt.

9. Be generous and ask them to be generous. Give your money away.  Pick a worthy organization and let them save their pennies to give away.  This month we are participating in a Baby Bottle Blessing for our local crisis pregnancy center…we set an empty baby bottle on the counter and the kids fill it with change they find or what’s leftover in our wallets at the end of the day.  We will let the kids bring it in and explain that it goes to help mommies and babies with not enough money.

10. Expose them to poverty.  Don’t keep them sheltered from the less fortunate their whole lives.  It’s hard for kids to process, but some direct exposure to kids who are in need is healthy and teaches them gratitude an compassion.  This might mean bringing them in to help at a soup kitchen, or sponsoring a child from a third world nation, like we did recently through Compassion International.  Reassure them that they are blessed and do not have to live like that but teach them empathy for those that do.