One skill so many parents wish they’d taught their kids is money management. I think it’s never too soon to talk to your kids about this. That doesn’t mean they will comprehend everything right away.
No kid is going to understand escrow or compound interest. (Many adults don’t even know what this is about.) But kids are smart these days.
Kids Learn About Money Management First by Observing Your Day to Day Purchases
Children hear and see things, absorbing everything like a sponge. But the fact is, almost 80% of Americans are living in debt, so I want to make sure my kid doesn’t grow up to be part of that statistic.
I’ve heard from quite a few parents about why they haven’t talked to their kids about money. Their reasoning is that they don’t know how or when to bring it up.
Opportunities to Teach Your Kids About Money Are All Around You
The thing is, kids know a lot more than you might think. For instance, they already know that mommy and/or daddy has to leave the house most days to go to work.
They know that we go to the store and come back home with new things. They see that we have these cards and bills in our purses and wallets that we give to people at the store. So, they’re already picking up on most of the realities of money without having it spelled out for them.
Three signs that your children are ready for the “money talk” include:
1. They can count.
Counting numbers abstractly and counting money are two different concepts. But once they begin to understand numbers and how to count things, it’s a good sign they can understand money. That means you might want to let them do simple tasks like count out money when you are at the cash register or counting back your change.
2. They’re asking to buy toys.
When you go to the store, it can be really annoying when your kids start asking you to buy them things. (On a side note, does anyone else dread going to the store with their kids because all they want is for you to buy them stuff?) But this is also a great time to talk with your kids about the difference between something you need, something you want and how to delay gratification by saving up for your purchases.
3. They’re paying attention to purchases and how you handle money at the store.
This would be a great time to just talk about the general concept of money and debit cards. You might also want to explain to them about credit cards and how it can be dangerous to buy lots of stuff using these.
Discussing Money with Your Kids Is So Important
Talking to your kids about money is one of the most important talks you’ll have. But it’s a big step that will put them on the right path for financial literacy and independence. There’s so many tools and resources that can help you with this topic we’ve included a few links that may help: