So many of the values that we hold dear as adults were born from a time when we were still young, impressionable children. This is one of the many reasons why it’s so important to teach and talk to your children about money – it helps put them on a sound financial path as early as possible. As you begin to do so for the first time, however, there are a few important things to keep in mind.
What is Money
It can often be helpful to start your conversation by talking about where money came from. In the old days, you made money by growing some corn or making some moccasins that you would then trade for other goods and services. Essentially, this was a barter system. You can equate this to kids trading things at lunch at school – just because you aren’t trading actual cash doesn’t mean you aren’t using currency, and that currency always has value.
The Value of a Dollar
Segue into a conversation of needs and wants which, in reality, isn’t all that different from the barter system of old. If they want to buy a video game, tell them how much that game costs. Tell them how many hours of work go into saving the money for that video game. Use an example of the number of lawns they would have to mow or driveways they might have to shovel. Is the amount of effort required to get the money worth the cost of the game?
It’s very good for your kids to understand early on what it takes to operate a house. Let them see first hand what goes into keeping a roof over their heads. Explaining the various costs such as electricity, water, heating oil will help to value those resources.
Money is Finite
One of the most important things to teach your children about money is that it is NOT unlimited. Teach your kids where debit card money comes from and how every time you swipe that card at a cash register, you’re making a choice about where your money is going and what you’re choosing to spend it on. It is harder for kids today to understand the limited amount of money a family may have because of the use of electronic currency like credit cards and debit cards. Remember that it isn’t JUST about teaching them about money – it’s also about teaching them to make the best choices possible in life.
Think about all of the things that your kids will face every day after their high school education is eventually over. They can essentially be boiled down to four things: finances, relationships, their beliefs and their health. It’s really important to teach children about each of these, as I believe there is a very big hole in the educational system regarding these real life items. Having a conversation with your children about money is about a lot of things that extend beyond the idea of currency. Children to young adults need to be aware that spending is an emotional experience. If you’re able to tie in good emotions to the concept of saving money, not spending it, kids will have a much better set of financial values from which to operate on as they grow.