3 Tips to Make Your Kids Money Aware

Author

Amanda Fulmer
June 09, 2023

3 Tips To Making Your Kids More Money Aware

If you think that teaching your kids about money seems a bit daunting, you’re not alone. Teaching kids a skill you may not be great at yourself, is difficult. On top of that, in some households, money can be a negative word and may get avoided or be a touchy subject. However, teaching your kids about money and having financial conversations is not only absolutely necessary but can be fun if you put the right twist on it! So, leave your own issues with money out of it, and start your kids down a NEW PATH! Put them on a road that will change the way your family sees money for the better.

When you start the conversation with your littles about money, you don’t have to start out teaching them about the NASDAQ! Start slow and make it fun. Get those creative juices flowing and open up a world of financial stability and wealth to them. Watching a kid learn that they could buy a duplex before they are 20 years old or knowing they could buy a business at 18, is so fun! They start dreaming! They start thinking about the possibilities and start asking questions about what they COULD do!

This is where your parent side kicks in, but make it enjoyable!

1. Talk to your kids about budgeting
Budgeting is NO ONES favorite subject but if you can reframe it for a kid, it’s not so bad! The way a kid needs to budget, especially if they’re under 12 years old, and an adult needs to budget are very different, so it shouldn’t be as daunting to them as it is to you! A kid’s basic budget should be very simple. Budgeting their money comes down to three allocations.

  1. Giving - In my household, we always GIVE the first 10 percent. That is a lesson straight from the bible and that is where we try to get our life lessons from!! In our case we give our first 10 percent to our church. Malachi 3:10-12 says "Bring the full tithe into the storehouse, so that there may be food in my house, and thus put me to the test, says the Lord of hosts; see if I will not open the windows of heaven for you and pour down for you an overflowing blessing.” That’s what we do and that is what we teach our kids. The first 10 percent goes to the church and then, if you want to give to other organizations past that, GREAT! No matter your opinion on this, take this from it - always, the first 10% is GIVEN.

  2. Saving and Investing - The habit I have taught my kids since they were 2 years old is that we SAVE 50%. Before you scoff, think about this concept in depth. To us, as adults, saving 50% of our income seems unrealistic and maybe impossible. BUT we are talking about kids! Teaching a kid to save 50% of their income is a WONDERFUL habit to etch into those growing minds. Because guess what?! If they do it as a child and it’s what they have always known, they are much more likely to carry this concept over into adulthood. Saving 50% of your income at 20 when you have insurance, a car payment, gas money and rent to worry about, is much less likely to happen if it’s a new concept to you and your finances. This may seem a like a steep number, but I really do encourage you to start this habit young. Saving 50% helps savings grow faster and creates an AWESOME habit that they can carry with them throughout their lives.

  3. Spending - Let them spend the rest!! Kids don’t have bills and if they are allocating their money to the 10/50/50 system, they have made all the right steps to create a great future for themselves so let them spend what’s left, for now!! Make it fun! Take them to the store and let them make some purchases - as long as it’s in their budget! If they have large purchases they would like to make, they may need to save up for that ”big thing”. There are even more lessons to be learned when saving for big ticket items!

2. Discuss the difference in a need and a want 
A need can be described as being something that is essential for living and functioning in your environment. Housing, food, and clothing are all needs. A want, on the other hand, is something that is desired. It is nonessential to live and can, a lot of times, be based on emotion. I think it’s important to talk to kids about this subject often because it can easily be forgotten when they are really fighting for that 15th Nerf Gun that they just HAVE TO HAVE! If your kids are like mine, they may even have a breakdown in the store and beg and plead with you to get that new gun when you both know they have one that is very similar in the closet at home. Talking about needs and wants is a great way to remind them that, when they are spending their money, they can spend their money on that 15th Nerf gun, but is is really a need and is it really something they want to spend that hard-saved money on!? Is it worth it? Do they really need it?

3. Let kids be kids and Make Mistakes
Learning comes from lessons! Sometimes we mess up as humans and when we do, we may not like the outcome but we ALWAYS learn from it! Kids learn best from experience, so don't shield them from the consequences of their financial decisions. If they spend all their money on toys and don't have any left for a planned activity, resist the urge to bail them out. Let them experience the natural consequences of their actions. And don’t bail them out on credit!! Don’t let them borrow money from you that they don’t have, just for that unnecessary purchase. Creating a mentality of “I’ll pay it back later” can be toxic for us humans!! We tend to bring that thought on and use it a lot more than we should and that thought process and mentality can lead to credit card debt issues very quickly. Practice a little tough love and let kids make a few mistakes with their money. The benefit is that they can learn hard lessons as kids and not as 28 year-olds with mountains of debt who have to move back home so that they can dig out of the hole they have created for themselves! Save them and yourself the heartache!!

Having positive conversations and opening the door of possibilities to your kids is what having these money conversations is all about. Learning the basics and creating healthy habits while your kids are young is going to lay a strong foundation for them financially. Get those wheels turning and let some of these hard lessons about money be taught sooner than later so that your kids start their life healthy and wealthy with money.

Thanks for reading!!