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Here’s one of the biggest questions parents ask themselves when raising their kids: When should I start talking to my child about money? Teaching middle schoolers about saving money and being responsible for their finances is no simple task.
The right answer is now, as soon as possible. Children understand the most basic money concepts by the time they are 3 years old and according to a study by the University of Cambridge, their financial habits have been established by the time they are 7.
If you haven’t had “the talk” yet, don’t panic. It’s never too late to start schooling them about something as significant and powerful as money.
In the same way you show your kids the importance of being honest and kind to others, wealth and economic values should also be taught. In a world where social media and advertisements are constantly pressuring them to make purchases to fit in, young minds must learn to see past that and understand that it’s best to build a stable, better future for themselves.
Sure, being able to fulfill every desire and need sounds incredible, but it’s not enough to create true and lasting happiness.
Are you ready to prepare your kids for a healthy relationship with money but don’t know where to start? Here are some great tips.
1. Help them understand the concept of money.
A great way to break the ice is by asking them relatable questions. You must get to their level. For example, “Do you know how much your favorite toy costs? What about your favorite candy? And do you know how much your shirt costs?”
This will get their minds into thinking about how many dollars they require to afford the goods they want and need.
A great place to get this conversation going is during a trip to the grocery store. Eating is a daily activity, and most kids love hanging around with their parents while buying stuff.
Involve them in the process and let them know how much each item you put in the cart is. Ask them if you should go for the fancy cereal that costs way more than the others. Let them weigh in.
2. Preferably, teach your lessons with cash.
Although learning about banking is necessary, the concept is much easier to grasp when they can see and handle the bills and coins. Unlike plastic, cash tells them that money is finite.
To them (even sometimes to us) plastic can seem like play money, it’s no wonder people overspend while using their debit and credit cards. Cold hard cash is much more real.
3. Saving is a habit that must be acquired at a young age.
Get them a clear jar, forget about the piggy bank. A see-through container will give them a better visual about how much they are saving for their future.
Help them decide on a goal: maybe they want to save to buy themselves a toy, or there’s a trip coming up and they want to bring their own money. Find something that will encourage them.
Once they have enough, suggest they only use part of their savings and to resume the practice.
“Look! You started with a penny, but now you have a hundred dollars! I bet you could two hundred in no time!” I guarantee, your middle-schooler will be thrilled and proud of this accomplishment.
4. Show Them How to Use Their Earnings Wisely
Now that they are storing their savings in the jar, show them how to use their earnings wisely.
If they want to buy something, they have to do it with the money from their savings jar. Have them get the exact amount needed and head to the store.
Hand them the money and let them give it to the cashier. This simple action will cause a tremendous impact on them. They are using their hard-earned cash to get themselves something.
It’s their effort that is paying for this treat. This might seem like something inconsequential for an adult, we’re used to it, we live this every day. But to a child who is just starting their relationship with currency, this is a very meaningful lesson.
5. Teach Them About Opportunity Cost
Want to cause an even stronger impact on them? Instruct them about opportunity cost on that same trip to the mall. Your child will likely want something else besides what you went to get (don’t we all?).
Explain, “You grabbed $5 from your jar. It’s enough to get you one thing. You can only afford one. If you would like both, you have to consider if you are willing to take more of your money.”
Your kid will have to weigh the decision. If he decides he wants to get both, explain that overspending might not be the best option. Which brings us to the next point.
6. Teach your kids to avoid impulse buys.
Make them reflect on the reason they want that item. Is it because it will help them fit in and feel accepted? Will possessing it make them happier? Maybe they didn’t even know they wanted it, they just saw it on TV and the ad said to collect them all.
Advertisements’ biggest targets are children and teenagers. Beat them to the curb by encouraging your children to wait and reflect at least overnight before making an impulse buy.
7. Make Them Earn It
Forget about allowances, make your kids earn the money you provide them. Show them to value work at a tender age by rewarding them for every chore done at home.
Even better, encourage them to become young entrepreneurs! Something as simple as a lemonade stand, selling Girl Scout cookies or arts and crafts can turn into a life-long lesson of financial independence, courage, and self-security.
8. Teach your kids to be generous.
Attending to others’ needs is much more rewarding than spending money on ourselves. Urge them to find ways to help their community, choose a charity and donate.
Most importantly, be by their side and congratulate them when they do good for others. This will create a special bond between you and hopefully help them make a special lifetime connection with the cause they are supporting.
9. And most importantly, set the example.
Be their role model. Those little eyes are always watching and looking up to you, even when you are not noticing. You can give your children so much advice, but none will stick if you don’t model the behavior.
Feel free to talk to them about money, it’s an everyday occurrence, not a subject that should be ashamed of or stigmatized. Show them the logic behind saving, investing, and giving to others in need. Explain the decision-making process on purchases and teach them to pay the bills on time.
The Bottom Line
Teaching young ones about money will take a lot of time, effort and patience. It won’t be easy, but it’s vital if you want your kids to grow into prosperous adults with healthy financial attitudes.
Too many people already struggle with debt and instability. Just like educating them on how to eat nutritiously and treat others well, monetary responsibility is a core value.
If you feel like it’s too late in the game or like you’re not the best role model, remind yourself that it’s never too late to clean up your own act. Showing them that you can reflect from your mistakes might even be a more valuable lesson.
And finally, don’t forget the most important rule: you are the parent, you set the rules.