The messages we send our children about money can be confusing. We want them to know that the occasional splurge on big-ticket items during holidays or birthdays is fine as long as it’s affordable. But at the same time, we constantly coach them on avoiding budget-busting excess. And last, but certainly not least, we also want our kids to value the importance of helping those less fortunate. Whew! To learn how to talk with our kids about money, we spoke with Mary Ryan Karges, of Moonjar, a company helping bring financial literacy to children and families.
Money Tip #1: Start talking!
Even if balancing your checkbook is the most you know about finances, you still need to forge ahead. “Don’t be afraid to talk about money,” says Karges, who assures us that “most parents feel inadequate.” She says your children will be on their way toward learning excellent lifelong money skills if you start talking to them now instead of avoiding the topic.
Money Tip #2: Use a visual aid
Moonjar makes the Classic Moonjar Moneybox, $25, a cool bank with three different compartments, “Save,” “Spend,” and “Share,” so that a child can allocate their money toward different goals based on their own age, interest and a parent or guardian’s guidance. A tool like this works, Karges says, because children learn by seeing and doing, not just by discussing.
Money Tip #3: Explain the choices
When your child starts begging for the latest trendy toy, think of it as a teachable moment. Ask him or her, “How much money will you have to save to buy that?” This is the simple beginning of your child’s learning that there’s a trading system with money, and that they can’t spend what they don’t have.
Money Tip #4: Begin early
Even preschoolers can slip pennies into a piggy bank, says Karges, so if they are too young for big talks, let them have the experience of putting coins into a bank and learning the words and concepts around money.
Money Tip #5: Consider giving an allowance
There are a variety of ways families approach allowances. Some believe that a child, starting around 6 or so, should get a small weekly stipend that they can allocate toward spending, saving and sharing. Others think children should do extra chores around the house if they want to earn money. Decide what works for your family and implement it, then help your kid figure out how to manage their little, but hopefully growing, nest egg.
Money Tip #6: Show, don’t just tell
Let your kids see you pay bills and deposit paychecks. And by all means talk about budgeting issues with them (obviously in an age-appropriate way). Let them see what charities are important to you, and allow them to find one they want to support with their own funds. For instance, if your child has a great love of animals, find a local shelter where they can contribute their money. Over time, your kids will really understand and appreciate what they have, work for what they want and feel gratified when they can help others.
5 Products That Help Teach Money Skills to Kids
In The Berenstain Bears’ Trouble With Money ($4.99 at Amazon), the popular series tackles another important topic when Brother and Sister Bear have to figure out how to save, spend and earn.
Moonjar’s Conversations to Go: Money ($16) will spark lively discussions with questions like “What is the most ridiculous gift you have ever given or received?” or “Why does a doctor get paid more than a teacher?”
If you need support and guidance, check out the best-selling Money Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Children, by Neale S. Godfrey and Carolina Edwards ($11.09 at Amazon).
Though we often ended up crying, sulking or tossing the board across the room when we played Monopoly (um, we were adults then, by the way), Monopoly Junior ($11.88 at Walmart) can be a super-fun way for the family to play a game that is all about the green stuff.
Older kids wanting to delve a little deeper so they can be on the road to financial independence might want to read The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of ($10.28 at Barnes & Noble).