Values-Based Money Training for Kids

Children begin life with everything provided for them. That’s okay. It’s supposed to work that way.

The problem comes when we as parents provide, without question, everythingfor our children for too long, robbing them of any understanding of self-sufficiency and leaving them socially crippled by adulthood.

We want them to be able to stand on their own two feet, but how do we get them there? What lessons do they need? Below are 4 positive value statements about money and ways we might introduce these concepts to our kids.

1. Good things come to those who wait.

This is a good one to start early. Many children can understand the concept of an allowance by the age of 4 or 5. Have them start putting that dough into the piggy bank. Then begin pointing out to your kids opportunities to use it.

Count their money with them on a regular basis. Let them spend what they have, but ask them first if there’s something more expensive they want morelater. Let them feel disappointment if they buy something less important to them now and have to wait longer to buy what they really want.

2. Do your research. Everything costs more than you think it will.

By the time they’re in their teens, maybe even sooner, your kids will be ready for a real bank account with a debit card. Now they can continue the lesson on delayed gratification on a larger scale, with more complex kinds of purchases that sometimes have hidden costs.

Let’s say you bought a video game system last Christmas; it’s been less than a year and your teenager already wants a different one. No problem … How much have they saved? Help them compare what they have against the real cost of what they want: shipping and sales tax for the system and all the accessories. They may need controllers, sensor bars, battery packs … and oh yeah, the games themselves! This exercise is early training for bigger, more complex purchases in adulthood (a house, maybe?).

3. You have to spend money to make money.

Once they’re old enough to drive you have a golden opportunity to teach your teenager about investing. A job with limited hours that won’t get in the way of school work and extracurricular activities is a great first step toward real self-sufficiency in a few years. An investment in a car ought to pay great dividends in both wages and freedom.

You might decide to help them with the purchase and/or insurance. Whatever the arrangement, just make sure that the investment your teenager makes is a significant one to them. Encourage them to track how much money they spend on the car in gas, maintenance, etc., versus how much they make working. With a decent job they ought to be pleasantly surprised at their profits after expenses.

4. You will be accountable tomorrow for your decisions today.

For most people, student loans are their first experience with significant debt, and it’s often a doozey. To get them accustomed to the concept of debt management, consider adding your 16- or 17-year-old as an authorized user on a credit card account for which you are the account holder. Explain to them that they are “borrowing” money from the credit card company and must pay it back plus interest.

You will need to set clear guidelineson how it’s to be used, of course. Assuming you feel you can trust your teenager and you are communicating regularly about card statements, this is a great tool for teaching long-term accountability before they begin borrowing much larger sums of money.

What’s it all about?

The overarching theme here is that money itself is not what life is about; it’s a tool we use in pursuit of what really matters.The consistent question to ask your kids is, What are you using this tool to build?

Protecting your children’s future is one of our favorite topics here at Lifeguard Wealth. If you have questions, don’t hesitate to ask.

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The opinions expressed by myself and other featured authors are their own and may not accurately reflect those of Lifeguard Wealth. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.