Let me just start by saying teaching kids about money is hard. Hey, y'all! I'm Hannah Rounds, a writer and occasional blogger (UnplannedFinance.com is my site).
My husband and I have two kids, Kenny age 4 and Shirley age 2.
For Rob and I, the early years of our children's lives have mostly consisted of keeping kids fed and dress and trying to keep them from injuring themselves or others. Most of our “life lessons” are about using kind words and (unsuccessfully) teaching kids to practice self-control.
While the “just survive” mentality of early babyhood has come and gone, I would be lying to say that we have the time or energy for tons of intentional parenting. That said, we are willing to slightly inconvenience ourselves to teach our children financial literacy. These are three lessons we're trying to teach our little kids about money. As our kids grow, we hope that these lessons will build in nuance, so our kids leave the house with a solid understanding of the role and value of money in their lives.
Money is for Giving
My husband and I are Christians, and we take the Biblical teaching on money seriously. While the Bible has a ton to say about money management, the most important lessons I think surround having a heart of generosity. In my mind, one of the best uses for money is to give it away, especially to those who have needs.
To help our kids catch this idea, we use two methods. First, I try to carry cash with me when I go downtown or to the grocery store with the kids. We usually see someone begging (with a sign) during these trips. I give my son the opportunity to hand these people a dollar and prompt him to ask the person's name. We introduce ourselves, shake hands and move on with our lives. These interactions get Kenny thinking for sure, and when he asks we make sure to emphasize the importance of having generous hearts.
I should mention, I don't really think giving homeless people money is particularly helpful to homeless people in most cases. We do most of our giving through charitable organizations that address holistic needs, but I also don't think it's bad to give homeless people money. And it is good for teaching a lesson to my kids.
Second, when our kids ask for something that's not in our budget we have a standard response. We could use our money for (fill in the blank, but usually eating at McDonald's), but we would rather use our money for something else. How else can we use our money?
Kenny has learned to respond that we can save it, or spend it on something better, or give it to someone who needs it more. Shirley still says, “I want!”
We Earn Money
Last year at FinCon, I received a copy of the book Money A to Z by Scott Alan Turner (highly recommend if you've got young kids). Both kids love this book, and I love the ideas in it. The book emphasizes that you get money by earning it through working.
When either kid mentions a toy that they want (or that they want to eat at McDonald's), we tell them they can use their own money. Kenny is savvy enough to know to ask whether he has enough to buy a toy or not. When we tell him no, he usually throws a fit (because we're awesome parents). However, we also give him opportunities to earn money.
We pay him to do certain jobs such as doing laundry (he can do everything but measure the soap), sweeping our outdoor steps, and “babysitting” Shirley (which he does while I'm home for up to 15 minutes). When the job is done, we immediately pay him and tell him he earned the money.
When he asks for money, we are quick to tell him he can have a job to earn money. He doesn't always take us up on the job offers, but at least he knows that he will only get money if he earns it.
Money is to Invest
Although our kids have to earn money for toys and junk food, we have instituted an allowance called the INVEST Allowance. Both kids can buy one book of their choice per month, and they get two dollars to give at church. Our goal is to teach our kids to love reading, to invest in their own education, and to teach them to give.
To be completely honest, we haven't had many teachable moments with this allowance, but I'm not giving up just yet. I hope that as our kids get older, we will have more opportunities to talk about investing in ourselves. If not, the only thing that's been wasted is some money which is not the worst thing in the world.
Pro tip regarding book allowances- many thrift shops have great kids books, so you can get away with having a $3 per month allowance when you have young kids.
Teaching Kids about Money is Hard
I have so many great ideas about teaching kids about money, but the reality is that being a parent is tough. There are so many competing priorities, and it's easy to push important lessons to the wayside.
Rob and I value financial literacy for our kids, but we cannot sit down and have money camp. These are our best efforts at teaching our kids about money. Although the ideas aren't probably that impressive to you, they are achievable. The only thing we need to put any of these ideas into action is a little cash (about $15 in $1 bills), and some forethought (to put the money in our wallets).
If you've got little kids, I would encourage you to think through the top few ideas you want your kid to know about money. Then, do your best to create teachable moments as opportunities arise. I guarantee if you think about it, you'll find the opportunity.
Brian is a dad, husband, and an IT professional by trade. A Personal Finance Blogger since 2013 who, with his family, has successfully paid off over $100K worth of consumer debt. Now that Brian is debt-free, his mission is to help his three children prepare for their financial lives and educate others to achieved financial success. He blogs at Debt Discipline.