It’s never too early to talk to your children about money matters. In fact, the sooner you start, the more you can build on their financial foundation as they get older. You need to teach your kids about money so here are some tips for helping your kids understand that money doesn’t grow on trees!

Teach Them About Budgeting

Give your child a small sum of money. Then explain that it represents the family’s grocery budget for the next 2-4 days. How far can they stretch it? What deals or coupons can they find in the online flyers? Would they be willing to give up their favourite gummy snacks to buy more of their favourite chips? These are all important questions that will teach them the value of a dollar.

Take Them Shopping

In the same vein as the above, your kids will never learn how to balance a budget if they’re always shielded from the prices of food, clothes, toys and gas. The next time you head to the store, drag your kids off the couch and take them with you. If you’re really lucky, you’ll gain a pint-sized shopping buddy who boggles at the cost of some items just as much as you do!

Make Them Work For Their Allowance

Some parents give their children a weekly allowance as a matter of course. Don’t make this mistake! Have them earn their allowance instead, especially if it’s for something like good grades or household chores that will pay off in additional ways.

If you want to give your kids some money each week, you can also set a base amount, and then children can earn additional money for extra chores. This works best for motivated kids.

If the kids slack off, close your purse strings. They’ll learn quickly enough that money only comes to people who are willing to work for it.

Encourage Saving

Ask your child about something big that they’d really like to buy. For example, maybe they’ve been eyeballing an expensive game console. Are they willing to save up for it? Help them research the price of the item and any deals that they might be able to apply towards it. Is there an end date for the sale? What percentage of your child’s allowance would they have to set aside every week to make the deadline? These kinds of calculations will set them on the path of long-term financial planning.

Don’t Fix Their Problems

If your child blows their allowance on a personal item and doesn’t have enough money to buy their friend a birthday present, don’t jump in and smooth things over out of a sense of embarrassment or obligation. Explain the situation to the friend’s parents, and let your child deal with the consequences of their overspending. Hard lessons are often the ones that stick, and it’s better to learn them over birthday presents instead of credit card debts.

Make It Fun

Your kids will be more interested in their finances if it isn’t always a boring subject filled with mom and dad’s nagging. Try to keep things fresh and exciting. For example, let them collect their money in a colourful piggy bank rather than a beige wallet, or allow them to request a withdrawal from the bank teller or ATM like a real grown-up. These little things can make all of the difference in their level of engagement.

Set a Good Example

You never know what your children are picking up from you, so be a good role model when it comes to financial matters. Don’t splurge on big-ticket items in front of them, and don’t teach them excuses like “Oh, I’ll save extra next week.” Be a smart, responsible figure they can emulate when faced with money issues.

If you’d like to check out some lessons by age, this article from Parents.com breaks it down for you. 

If your kids need some help understanding their finances, these tips should be a good start to get a conversation going. Good luck!

Author: Jeff S.

Proud father and husband. Loves music, Nine Inch Nails, UFC and inbound marketing.