Money habits begin from your early days of growing up, watching how mom and dad handle their finances, and learning the do’s and don’ts of how to spend and save money. Of course now if you have kids of your own you’re likely eager to pass on the positive traits—like your super-saver tendencies—while putting a halt to the negative ones, such as that futile resistance to impulse shopping.
“On a whole, our relationship with money as adults is often indicative of how money was experienced in our upbringing,” says Jennifer Musselman, a therapist and author of “The Hip Girl’s Handbook for Home, Car & Money Stuff.” “We are also influenced by what [our parents] didn’t teach us—such as not to worry about money, or that money is plentiful and they never have to think about it.”
Yet even though our kids may be ripe for absorbing financial dos and don’ts, the money conversations may not always be happening: More than one third of Americans feel uncomfortable talking about money, while 18% say it is a taboo subject in their families, according to a 2014 study by the American Psychological Association.
But it’s important to start the dialogue with your kids, even at elementary-school age, because “right around the age of 10, [children have a] foundation of values and priorities, and how they respond to responsibilities are quite shaped by that time,” Musselman says.
So below are four money lessons to consider imparting to your kids at an early age to help ensure they inherit your good habits—and nip the bad ones in the bud.
Lesson No. 1: Budgets Have Boundaries
Perhaps you splurge on extravagant summer vacations in the name of quality family time, or upgrade your car every two years to accommodate your growing kids—but if you’re busting your budget or going into debt as a result, you may actually be teaching your kids that living large is more important than spending responsibly.
“A mind-set of debt and living beyond one’s means is often a sign of a much deeper issue of not being able to restrain yourself,” says Joseph Sanok, a family counselor and author of “Mental Wellness Parenting.” “Throughout childhood and adulthood, we have to delay pleasure in order to have a longer-term reward. This is true whether the family has means or struggles.”
To help kids’ understand the importance of spending limits, it’s O.K. to reveal when you can afford a purchase and when you can’t, says Musselman. So if your child wants the latest designer jeans or a tech toy that doesn’t fit in that month’s expenses, Musselman suggests telling her that it’s a cost you can revisit in a few months. “If you never learn that sometimes you have to wait to buy something, [your children] may develop entitlement behavior,” she says.
Lesson No. 2: Money Doesn’t Equal Self Worth
It is important to be careful about your messaging when it comes to doling out money to your kids—particularly in differentiating between paying for “good behavior,” as opposed to paying for making an effort, such as by doing chores or putting the work in to make an “A” grade.
If you pay your child for “behaving nicely” at the theater or “not fighting” with their siblings, what you might be inadvertently doing is “associating the money with [a child’s] being worthy of it,” says Pamela Sams, a financial adviser and president of Jackson Sams Financial Services, based in Herndon, Va., who has conducted workshops on children and money values. “The problem this creates is that their self-esteem or self worth may start to be built around money.”
Lesson No. 3: Money Is Something You Work For
The topic of whether to give your kids an allowance—and what sorts of tasks to give it for—is a hotly debated parenting issue. One opinion that seems to be prevalent, however, is that giving kids the opportunity to make money for doing certain things will help them develop a healthy work ethic.
By giving kids extra tasks to do or even supporting them in getting an after-school job, they begin learning that they can have a direct impact on how much money they have available to spend.
Musselman even suggests giving them a dose of the real world by creating timesheets for them that help them keep track of which tasks they are getting paid to do and how many hours they spend on those tasks. That way, “they get to see [their work] on paper accrue over time,” she says.
Lesson No. 4: Planning Is a Part of Life
Smart money management, whether it’s for a six-figure paycheck or a $20 a week allowance, includes having a handle on your regular expenses. So it’s important that parents help show their kids that planning is key if they still want something left in their piggy bank come Friday.
One of the best areas to help teach that lesson is in what you spend on food, says Sanok. Too often, frazzled moms and dads will order takeout or take the whole family to a restaurant several nights a week because they’re just too tired to cook. But “eating out [too often] teaches them not to take time in order to save money,” Sanok says. “And it’s teaching kids, ‘We’re eating out because we didn’t plan ahead.’ ”
Instead, use family meal planning as a way to give your kids a say in what they’re eating—as well as to explain to them how doing this ultimately helps the family save money. This approach also “allows for the experience of eating out to be something special, not expected,” Sanok says.
“I love eating out, but I don’t want my kids to feel that their food is someone else’s responsibility,” he adds. “I want [my children] to own the process of what they put into their bodies, where their money—or the family’s money—is spent, and how to utilize money in a way that’s more meaningful than a quick meal.”
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