What is the biggest mistake that parents make when teaching kids about money?
According to Beth Kobliner, author of Make Your Kid a Money Genius its that they don’t really talk about it. Then, as the children grow, parents are frustrated when young adults get into debt. “[They] do not understand money basics or how to save or how to invest.”
Instead of long lectures, experts recommend that understanding money, and how debt happens, should be part of everyday conversations. Here are a few examples of things you can do now, teaching kids about money, that prevents debt laden young adults later.
Tips: Teaching Kids About Money
- When you go to the store, chat about the difference between wants and needs. We need fruits and vegetables and beans and rice. Want chocolate milk? Need shoes? Want toys and electronics? Talking about the importance of not giving in to wants. Kobliner says that studies show that not caving into demands and wants leads to young adults less likely to have credit card debt.
- Offer opportunities to talk about money. Explain to your children what you wish you knew when you were their age.
- Take your kids to the bank. With the popularity of online banking kids don’t often get to see parents handle bills and budgets and savings. Taking kids to the bank offers an opportunity to talk about why we keep money in the bank. Talk about interest and protection.
- Give kids a chance to shop around and comparison shop. Whether it’s for bank interest rates or the price of a new toy, kids can save money and brainstorm with parents about what that $$ can be used for. This sense of control is a very powerful motivator.
- Give allowance. And the recommendation start as early as age 4, and not to link it to chores. Letting kids have control over their money, with a plan for what percentage to spend, save, and give charitably, gives them good practice for how to manage money in the future.
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