7 Magnificent Money Habits to Teach Your Children

September 5th, 2017 by

7 Magnificent Money Habits to Teach Your Children

As with many things in life, it’s important to set goals and boundaries from a young age. The money expectations that you set for your children from an early age could help them develop the requisite financial skills and tools that will serve them well in the long run. Our childcare professionals have amassed 7 ways to establish financial habits for your child from a young age.

Healthy Money Habits to Teach Your Children

Teaching healthy money habits to your children can begin as early as the age of three. As children grow older, parents can slowly expand the conversation to include student loans, investments, and more advanced financial concepts.

1.      As a Parent, Model Good Financial Behavior

One way to teach children the value of money is to model good financial behavior. Young kids are sponges by nature and begin to pick up habits from their parents early on. What are your children learning from you about money? Parents should be transparent whenever possible and appropriate, and allow kids to see what household essentials such as the rent and/or bills cost. These numbers, especially rent or mortgage, will be too high for your child to understand but it will serve as a good introduction to how and where a paycheck can be distributed.

Frequently upgrading or purchasing the newest technology items, cars, or other items can lead children to develop an “I want it, I can have it” outlook on finances. The lesson children should learn is that it costs money to buy things, so they can’t always get what they want. Additional opportunities to practice good financial behavior includes cooking and eating at home, and shopping on a budget.

2.      Teach Kids About Comparison Shopping

Teaching children about comparison shopping means getting them involved in the conversation. When you go grocery shopping or run everyday tasks, take your children with you. Children need to understand that there are aspects other than the price that should be factored into the decision and buying-making process. These factors include reviews or ratings, and brand name items. Take cereal for example. A store might have two boxes of cereal on sale for $5, and another store might have three boxes of a different cereal on sale for the same price. Sometimes it is better to go with the higher quality item instead of quantity.

When children are very young, they often need to view things visually or work with them hands-on. Parents should keep the process simple and compare just a handful of providers or features at a time.

3.      Age-Appropriate Financial Rules to Follow

Every child grows and matures at a different speed but the sooner parents start taking advantage of everyday teachable money moments, the better off their children will be later on in life. Kids will then quickly learn that going into a store doesn’t mean you’ll always be able to purchase something. Parents.com has an expansive list discussing milestones up to the age of eighteen years.

4.      Emulate Delayed Gratification with Your 3-Year-Olds

A good age to begin introducing the concept of delayed gratification is the age of three. The lesson here is to teach them to wait for a bigger pay-off rather than always going for instant gratification, i.e, saving their money rather than purchasing the newest toy as soon as it becomes available. At this age, children are learning about patience, and how to respond when they don’t get something they want immediately. Additional suggestions to help them understand the concept of delayed gratification is attending to their feelings, and teaching them how to practice listening.

5.      Discuss the Merits of an Allowance

Researchers are divided on tying chores to an allowance. Children need to do chores because they are members of the household, not because they are tied to a monetary benefit. If you decide to give your child an allowance, many experts advise starting at the age of six. The rule of thumb is a dollar per year of age, so you might want to consider giving your child about $6 per week. Kids at this age need to learn that if they really want something, they should wait and save to buy it. Sometimes what will happen is that by the time a child has saved enough, he or she might no longer want the item.

6.      Include Your Elementary Kids in the Decision-Making Process

Open a savings account for your children early, and allow them the opportunity to monitor their savings activity over the years. A piggy bank is another great teaching tool. Make sure that the bank you give your child has save, give, and spend compartments. The piggy bank is a great way to develop financial restraint and help them understand that all of their money should not be spent right away. Stress the importance of generosity. Research shows that children who volunteer and give to charity are more likely to do so as adults.

7.      Encourage Pre-Teens and Teens to Get a Job

Teenagers from a certain age may be able to work to earn an income. The Student Non-Factory Employment Certificate is issued to minors ages 14 and 15 who plan to work at allowed occupations during vacations or after-school. Create a budget and deposit into their account so that they can cover their own expenses, such as purchasing their own lunch. This helps them to experience what it feels like to make choices with money. Earning money will give teenagers an understanding of how much they need to work to pay for things they want.

Contact the Nanny Authority for More Information

An additional way of ensuring that parents raise money-conscious children can be found on our raising grounded children blog post. Here at the Nanny Authority, our nannies are well-versed in assisting guardians rear kids with the right values. For more information on how our placement specialists can help you determine exactly what type of nanny will best suit your family’s needs, contact us via e-mail or at 973-466-2669 today!