From birthday and holiday gifts, to allowances and part-time jobs, children slowly begin to earn money as they grow up. Some high schools teach personal finance as part of their curriculums, but students still find it difficult to navigate the world of spending and saving. With student loan numbers rising, it is important to talk to your children about how to save money from an early age. The next generation of kids are growing up in a world of Venmo and Apple Pay, so it can be difficult to talk to them about money when it’s slowly becoming a thing that we no longer hold in our hands like cash and coins.
So, how do we get children to understand not just the value, but how to properly save and spend money? These tips will make it easier to talk to your kids about money.
- Show them the invisible money. Most bills are paid online and many banks have moved to mobile formats, such as apps and online banking. Openly show them how you move money around to pay for things and save. This can give them a better concept of how money can be managed.
- Communicate. Now that you have shown them how your family manages their money, it is important to openly talk about your family’s financial situation. Don’t just tell your kids that something is too expensive and you can’t afford it. Explain to them why you can’t afford it. Talk to them about the payments that are made in order to live your lifestyle. Payments such as insurance, mortgages, subscription services, taxes, bills, etc. This will help kids understand the concept of disposable income and how certain things must be paid for first before luxuries can be thought about.
- Budget. When you give your kids allowances for doing chores, or they get money as a gift, encourage them to write it down in a notebook or on their phones/laptops. This will help them understand how to save their money and keep track of their finances better.
These 3 tips will help your kids understand the concept of money in an era where money is no longer physical. By being more open and less secretive about family finances, and including your children in the conversation, they can understand the importance of saving money and how to conduct their own personal finances. When they go out with friends or buy a new video game, they will have a better grasp on the value of each credit card swipe.
Giving your kids only cash is still a great way to teach them about finances, but they are growing up in a world where cash is basically obsolete. It’s better to equip them with knowledge that will help them throughout their entire lives.