April 15th is Tax Day and what better time to teach your family about the importance of financial responsibility?
Here is a list of five things to teach your kids that will help them be more responsible with their money.
1. The Principle of Spend, Save, Give
Teach kids to put their money to different uses: spend, save and give. Now is the time to learn and practice these habits (habits that many adults still are learning). Make it easy for your kids to divide up the money. Give them allowance or birthday money in smaller bills or coins. Use a 3-section bank that you can buy or make. It will help reinforce this message and encourage this behavior.
2. You’re In Charge of Your Money
I let my kids use their “SPEND” money on whatever they want. Now is the best time for them to learn and practice when the stakes are low. A few bucks wasted now is a much better mistake than thousands of dollars when they are adults. I had a college roommate who was so deep in debt that she was considering declaring bankruptcy. I don’t want that for my kids. I want them to practice making good decisions now.
Likewise, I let my kids decide where to use their “GIVE” money. One of my daughters is a big animal lover. She wants to give her money to an animal shelter. If it were my money, I’d give to our church or orphans. But guess what? It’s her money, not mine, so I let her make the choice.
3. Learn From Your Mistakes
My oldest daughter saved and saved last summer. She desperately wanted an American Girl doll. When she was ready, she piled up a sack of change and crumpled bills from her piggy bank on the store counter. After the clerk counted up the money, she said that my daughter was about $8 short. We left the store without a doll. She saved more money and we returned to the store to buy the doll later that same month. What a valuable lesson about making sure you have enough money! It was hard to watch her disappointment but I knew that she wouldn’t make that mistake again.
Interestingly enough, this same daughter recently told me that she wished she hadn’t spent her money on American Girl dolls. She said, “I don’t really play with them very much. I wish I had the money instead.” She’s learning how to make wise buying decisions by making mistakes. I think it’s fantastic.
4. Money is a Limited Resource
When we go to the grocery store, or any store, I talk a lot about how I make buying decisions. It’s really important that my kids learn from my example.
Take toilet paper, for example. I talk about how we must consider if we need the expensive toilet paper or if we should get the cheap toilet paper. I talk to them about how I have to budget the amount of money we spend and make choices accordingly.
We have the same conversation when they ask for those kid-enticing things. I explain that we can’t spend money on whatever catches our fancy – that we have to carefully decide about our purchases because we don’t have unlimited money. Sometimes I can say yes but not always.
5. Want vs. Need
Finally, we always talk about wants and needs. Needs being those basic necessities of everyday life – food, clothes and shelter. Wants being extras that would be nice but we don’t have to have them.
It helps to have wish lists. All of those wants can go on a holiday wish list. But if a toe pokes through their tennis shoe, that doesn’t go on the wish list. We go and get a new pair of shoes.
It doesn’t take a lot of time to teach kids to be financially savvy. Start now with these five principles. You’ll be so glad you did.