Having conversations about money with young children may seem daunting, but it doesn’t have to be. As a parent, you want them to develop smart habits and be disciplined with money starting at a very young age. Here are four things to consider.
Start Simply, When They Are Young
Start with even the littlest ones by including them in everyday activities that involve money, such as grocery shopping. This allows money to become a tangible concept. You can ask them questions such as, "We have three dollars to buy a treat, would you pick ice cream or cookies?". Be prepared to honor their request, even if you really wanted the ice cream. These types of conversations help children to understand that there are trade-offs to any decision, and that money is not infinite.
Explain to them that your family has a budget, and not everything they want—or that you want—fits into that budget.
A weekly allowance first teaches many kids about money. I’m a big fan of tying that allowance to getting chores done around the house. I also like breaking down the allowance into “buckets”. One for spending right away, one for saving for that “big item”, and another for charity.
Talk About Values
My favorite subject! Encourage your kids to reflect on what is important to them both for today and for the future. With kids, the future may be an upcoming summer vacation, but that’s okay. Discuss why it makes sense to hold off on immediate gratification for a longer-term reward. That helps them learn how to set goals and stay disciplined. It causes them to think beyond the moment, which is critical to the concepts of budgeting, saving and investing.
Lead By Example
Are there financial or economic topics that you are not so knowledgeable about? Take the opportunity to learn with your kids. Showing them that you are interested in growing your understanding of money will heighten their interest as well.
Financial habits are formed at a young age. Start the conversation today.
Shari Greco Reiches
Shari co-founded Rappaport Reiches Capital Management with one goal - to maximize the return on life for her clients. Please connect with Shari below. She loves to talk about investing, financial planning, and Barry Manilow.