4 Things You Need To Know About Kids And Money

Our financial habits are usually patterned from what we learnt or what we observed about the way authority figures in our lives related to money.

Nurturing a good understanding how money works can form a solid financial foundation for kids, turning them into financially responsible individuals from an early age.

As the Bible says in Proverbs 22: 6 “Train up a child in the way he should go: and when he is old, he will depart from it.”

This article reveals four things you need to know about kids and money.

1. They will model you, irrespective of what you attempt to teach them

Kids are very quick to point out inconsistencies between what you say and what you do. When it comes to money, most adults do not want to be challenged about why they are not following the rules they have set for others.

What you do will carry more weight in the eyes of your kids and they will model your behaviour. You need to teach your kids how to be responsible with money.

2. If you don’t teach them about money, they will still learn about it

More often than not, if you do not make the effort to educate your kids about money and finances, they will learn the wrong things by doing what everybody else is doing.

In many households, talking about money is forbidden and this can be a source of emotional hang-ups around money.

The kids quickly learn that there is something wrong with discussing money issues until they get into a financial mess themselves, which ironically could have been avoided had there been a forum for discussion in the first place.

3. The sooner they realize that money has to be earned, the better.

Kids need to see the link between work (effort) and money to safeguard them from the entitlement mentality that can cripple them financially later in life.

They have to understand that money is earned by exchanging value as opposed to a right as a result of being your offspring.

Teach them how to earn money at an early age and help them tap into the entrepreneurial ability that we are all created with.

4. Do not borrow money to buy them toys you can’t afford simply because they are under peer pressure

If kids want an expensive item, simply telling them you don’t have the money will leave them thinking about how you are able to afford the things you want.

Instead, you could let them know you will only make a contribution towards the purchase after they have come up with a good chunk of the money, and let them offer you suggestions on how they intend to do that.

The challenge here is letting them understand that although you have enough money to put food on the table and address the family’s current financial needs, it does not automatically translate into the availability of extra spending money for them.

Kids can sense financial problems and tension from miles away. It is not difficult for them to notice a drop in the standard of living when your financial troubles finally manifest themselves.

If they are old enough you can have them suggest solutions. In this way, you are teaching them how to handle financial problems that they will inevitably have to deal with later in their own lives.

This is better than shielding them from the reality and letting them think money takes care of itself.

For as long as they are still kids, their currency is time. Armed with this insight, make the time to teach them the right things about money as opposed to bribing them with toys to make up for your absence.