Everyone wants to help their kids become successful – but that’s easier said than done. You have to teach your kids so many things, and make sure they become ethical individuals who uphold their values. I can’t teach you how to raise your kids, nor would I try (we all have different values, religions, and priorities). However, I’ve put together a list of financial skills to teach your kids. Whatever else they decide to do, learning these financial skills will help them achieve it. After all, money isn’t innately bad or good, but we can use it for amazing things!
1. Help Your Kids Understand Budgeting
Building a budget is one of the best fundamental skills for anyone concerned about personal finance. It helps you stay on track to reach your goals and it keeps you aware of your spending habits (both the good and the bad).
For younger kids, you can start teaching them about a budget at the grocery store. Remember to keep it simple, but let them know you have a limit on what you can spend, and let them be engaged in the process as you decide what to get (or put back on the shelf because it is too expensive). Seeing you stick to your budget and weighing the prices of different items carefully (to pick the best option) is a great start to reinforcing good financial habits.
For bonus points, talk them through your thought process as you shop. I would like to stress one thing though – make this fun, not intimidating. If you have a negative attitude about money and budgeting or stress them out about the financial security of the household, that can have an adverse effect.
Needless to say, as your kids get older the more details you can talk to them about – and the more responsibility you can give them. Teach them the core budgeting habits and techniques young, and then when they’re old enough to fully understand, let them practice their skills.
2. Show Them (Moderately) Frugal Spending Tricks – Like Coupons And Bargain Hunting
In a way, this is heavily linked to what I discussed with budgeting. Show them HOW you stick to a budget. Let them see all the tricks and different tactics to getting a good price and saving money, and let them participate too. For example, you might give them the opportunity to find you special sales and coupons. Then, if they help you save money, as a sort of allowance you can give them a percentage of the amount they saved you in the end. This is an easy way to give positive reinforcement, keep them excited about saving money, and have them consistently participate.
3. Encourage Entrepreneurship – From Lemonade Stands To Babysitting And Mowing Lawns
Let your kids learn the value of hard work and a dollar! Encourage any entrepreneurial endeavor they try to pick up. Not only will a little “hustle” on the side help them build a strong work ethic, it will give real meaning and value to money. Additionally, check out my article on lucrative side hustles. Now, they aren’t intended for kids, but it’s best to lead by example. If you start a side hustle on your own, that will set the bar for them, and you could always include them in whatever it is that you’re doing (for example, you could both do photography or tutoring together).
4. Teach Them The Value Of Savings
It doesn’t really matter if you open up a savings account with them or get them a piggy bank, just get them in the mindset to save. A common, and easy, tactic to get your kid saving is to make them purchase something for themselves. Specifically, make them purchase something big (at least for their age).
For example, if your child is very young, make them purchase a game, pack of cards, coloring book, or something along those lines on their own. If they’re a bit older, like 14 or 15, you can make them get their own gaming console or laptop to help teach them how to save money. Of course, another great option (but probably not the first time you should make them save) is when they need to get their first car.
However you want to go about it, showing them the value of saving and then helping them build strong habits will help your child be set up for success.
5. Teach Them How To Earn Money
Entrepreneurship and hustles can help here, but it isn’t necessarily the “whole” package. Make sure your kids turn into adults with a skillset that can provide them a livable income. I know, that is easier said than done, but I’m sure that is a major priority for most parents. Supplement their formal education with training of some sort. Need to repair something? Show them how to do it or even have them assist! On top of that, start teaching them good negotiation strategies and other skills that will help them land a good job (or start their own business) when they reach adulthood.
6. Teach Them How To Intelligently Give And Donate
I’m not kidding. Giving to and helping others is a great feeling and one of the most rewarding experiences you can have. Clearly, teach your sons and daughters to learn how to take care of themselves, but also show them how to use their success to help others out too. It doesn’t even have to be money – donating time is just as important. However you choose to teach this is probably perfect, but it’s just as important as everything else on this list. Show them how you contribute to others, help them find something they’re eager to help others with, and I’m sure they’ll grow up to contribute a lot to other people.
7. Teach Them The Power Of Compound Interest
This one is very hard to teach, but it’s incredibly important for them to learn and understand if they want to be able to have long-term financial security. The best, and most straightforward, method is probably to just open up an investment account for them and have them save money and see the progression from it. Additionally, if you don’t want to open an account, when they save their money you can give “incentives” to save for longer periods of time where you’ll actually give them money for saving past some date you decide. It’s not as much of a concrete example, but it still helps in the abstract and may be better for younger kids.
8. Show Them The Value Of A Dollar And The Value Of Opportunity
More than earning money, once they get old enough to understand, routinely show them how much everything costs. It is one thing for them to know how much work goes into earning money, but if they don’t understand how much life in general costs, it won’t give them the context they’ll need for when they finally move out.
On top of that, try to find ways to show them the value of different opportunities. For example, if they want to do one activity, it may mean they can’t do another. Alternatively, if they buy one item remind them that means they can’t get a different one. Remember, keep it light-hearted and fun! Until they get into their later teen years, most kids will have a hard time putting in the effort to learn and keep good financial habits if it comes across to them as intimidating.
9. Discourage Impulse Spending
Always discourage spur-of-the-moment purchases, whether it is with your money or money they earned. If they want you to buy something, it is pretty easy to just say no, but try to explain why. If they want to buy themselves something, remind them to be wise with their spending and, if possible, remind them of a time they purchased or did something and almost immediately regretted it. When they’re young, make them wait a day or two to see if the still want it. If they’re older, tell them to wait a full 7 days to see if they still want it (which is good advice for all adults).
10. Teach Them Contentment – The Ability To Find Happiness Wherever They Are
Make sure they can be happy with what they have. If they appreciate where they are, they are far less likely to make poor financial choices. Besides, as a parent I’m sure you’d prefer your child to be happy rather than constantly obsessed with the next “best thing” to get that will FINALLY make them happy. This is another item that is easier said than done, but if you do several of the things I mentioned above (especially if you teach them how to give) I’m sure they’ll end up developing this too.
Conclusion
Teaching your kids financial skills can be intimidating, but it doesn’t have to be. If you have fun with it, I’m sure your kids will too – which will only help them learn more. Remember, start young, lead by example, and make sure money isn’t a taboo topic in your household. Acorns is a great savings and investment app for beginners – making it perfect for high schoolers or people in college.
If you have any other tips or suggestions, feel free to leave them in the comments! For more content like this, and a free budgeting template and financial goals worksheet, be sure to sign up for the Bitter to Richer newsletter.
