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Four Money Habits You Need To Teach Your Children

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money habits for kids

If you want your child to grow up as a financially independent adult, start teaching them money habits young. Today, I’m talking about four money habits you need to teach your kids if you don’t want them living at home until they’re in their thirties.

1. Delayed Gratification

As technology has changed throughout the years, we’ve adapted to receiving instant gratification. Think about how irritated you become when it takes longer than two days to receive a shipment. Thanks, Amazon Prime! When you don’t know an answer, it takes less than 60 seconds to search for the answer. Thanks, Google!

While these are amazing benefits of living in our modern world, having instant access to whatever we desire can lead to bad habits. Force your children to wait for something they want, even if it’s just a few minutes. For example, increase their allowance by 10% if they wait for payment on Saturday, instead of Friday. Small changes in your day-to-day living that delay access can lead to increased resistance to instant gratification for your child.

2. Compound Interest

Go beyond teaching your children the value of saving. Teach them the benefits of saving early, specifically how compound interest can grow their money over time.

You’ll want to keep the concept simple and age-appropriate. You can pay compound interest on their allowance while encouraging them to save up for something specific (say the latest video game). If you’re struggling with coming up with a way to teach them, consider this marshmallow game.

3. Live Below Your Means

I know with my kids, the minute I hand over their allowance, they’re already figuring out how many Pokemon cards they can buy. I have to remind them to split their money up into giving, spending, and saving categories. We even have these special piggy banks to make it fun.

While using this 3x concept, they’re learning to save and give, which is amazing. However, I’m more interested in teaching them to live below their means. When they get ready to buy their first home, I want them to laugh at what the bank is offering them for a mortgage. They’ll instinctively know that they don’t want to spend as much as they can afford. Instead, they’ll understand the value in living below their means, so they have additional money to fund their emergency fund and to put in the church plate, and to help a friend out in need without requiring them to repay the loan.

4. Creating A Positive Money Story

As we grow into adults, we create our own money story, and that money story is directly attributable to how we spend and save our money. Help your children the best money story for themselves, one that will provide them with a strong sense of balance between saving and spending.

While her program is not kid-related, Natalie Bacon’s course, Money Mindset for Her, is where I learned how my money story was leading to poor money habits, specifically to overspending. She taught me to change that story, and it continues to have a positive impact on my life a year later. If you’re not clear on your money story, consider giving her course a try. Then teach the principles to your kiddos. And even better, teach by example.

Do you have any additional money tips for kids? Let us know in the comments below.

Read More:

Year-round Money Saving and Fun Activites for Parents and Kids

The Average Grocery Bill for a Family of Four (and How to Save on Yours)

3 Unexpected Options for Stay At Home Moms to Make Extra Money

Teach Your Child About Money – Free Savings Chart for Kids

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savings chart for kidsOne of the most wonderful gifts you can give your children is a healthy understanding of money. Not a craving for it or an assumption that it will lead to happiness. Instead, you have the privilege – the responsibility – to teach children about hard work, the power of saving, the dangers of debt, and the gift of giving. To help your children learn, we’ll also set you up with a free savings chart for kids.

How to Teach Your Child About Saving Money

Many people are in crisis mode, financially. It’s impossible to know what they learned or didn’t learn about money at home, but would America look different if more parents taught their children the principles I listed above? If more parents led by example by communicating together about a budget, saying no more often to frivolous spending, and showed their children how to save up and pay cash instead of using credit cards?

It’s purely my speculation, but I’d go so far as to say we’d have less stress, less divorce, fewer addictions, more giving, and greater job satisfaction. Do you agree?

With the right steps, we can teach our children to live differently.

You’re probably thinking, “What about student loans? I was just trying to further my education and now I’m overwhelmed by debt as a result.” Totally valid point. I remember approaching high school graduation and hearing everyone discuss their reasons for choosing one school over another. NOT ONCE did my friends and I stew over the debt load we’d receive from student loans. None of us saw what was coming.

In fact, according to StudentLoanHero.com, outstanding student loan debt reached more than $1.4 trillion in 2017.

How can we teach our children to save money in the face of such a burden of debt?

Start the Conversations

A great way to educate your young tribe about the dos and don’ts of spending is to create an open line of communication. Encourage them to ask questions. Show them the process of paying for your groceries or a meal at a restaurant. Take them to the bank and show them how you make a savings deposit.

Also, a conversation is a great way to tackle topics like:

  • Work ethic
  • Getting a job
  • Planning for the future
  • Saving for a major purchase
  • Saving for college (tell them about the ways you are saving for their college while they’re young)
  • Integrity
  • Greed
  • Envy
  • Contentment
  • Generosity

You don’t have to run down this list every night at the dinner table, but the more conversations you do have about these topics, the more seeds your planting in your child’s mind. You’re teaching her how to think about money, not what to think.

Put them to work.

We’ve covered the important step of talking about money. Next, it’s time to apply what your child has learned. If he’s old enough to hold a broom or to straighten up his room, your child is old enough to get paid for chores.

It’s important that he knows the money isn’t just for spending. Saving is a difficult concept for young minds, at first, unless they have something for which they’re saving. For example, if your daughter sees a Belle doll in the toy aisle and begs for you to buy it, you have some choices. You can purchase the doll, you can discuss the cost and why it’s not in the budget, or you can write down the dollar amount on a paper, head home, and help her calculate how many chores it’d take to save for the doll.

To aid in that endeavor, here are some free tools you can use with your child.

Free Savings Chart for Kids – and Other Great Savings Tools

Printable “My Savings Goal” Visual Poster – via Educator101.com

Downloadable “Share, Save, Spend” Chart for Kids – via iMom.com

52-Week Money Challenge for Kids

Printable Play Money for Kids

Combine these tools with some great conversations and hard work around the house and your child has a recipe for a bright and well-balanced financial future.

Got some tips for teaching children to save money? Share one below!

Are you a stay-at-home mom? Check out these bonus resources we created just for you:

How to Empower Your Child to Avoid the Burden of Debt

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How to empower your kids to avoid the burden of debt when they grow up!How many twentysomethings do you know starting their post-collegiate lives with six figures in student loan debt? How many times have you seen the burden of debt harm relationships, set back dreams, and perpetuate a lifestyle of “just getting by?”

Has that ever described you?

I’ve experienced student loan debt, overspending my budget, racking up credit card debt, living paycheck to paycheck with no savings accounts, and fear about tomorrow because of debt.

Our culture isn’t so hot at teaching kids how dangerous debt can be, only how to accumulate it. I’m part of the blame because it was once my job to sell credit cards and car loans when I worked at a bank.

In 2012, my husband I paid off our last non-mortgage debt and couldn’t believe the freedom it afforded us. Having a taste for that made us decide to raise our children with that same debt-free mentality.

How to Empower Your Child to Avoid the Burden of Debt

Lead by example.

How did your parents handle money? If asked, could you list a few specific memories you have of their financial habits (good, bad, or ugly)?

If I had to guess, I’d say you remember quite a bit. Your kids will, too.

What you do with your finances, how you behave under stress, and how you treat others is all under frequent observation if you’re a parent.

It’s not all scary, though. If you choose to lean into this process, to do the best you can to lead a good example for your kids, the benefits are two-fold:

  1. Your financial habits will improve the more intentional you become. Your debt load will decrease and your future outlook with your family will look brighter.
  2. You will make a long-lasting impression on your kids of what healthy financial habits look like. As I stated early, they’re bound to remember a great deal of it.

Don’t put it off.

I once interviewed a father of seven who took the time each year to teach his kids about taxes. His reason?

I think one of the best things you can do for your children is to teach them about independence. Independent people earn a living and don’t come back to borrow money from mom and dad when they are in their thirties.

We try to prepare the children for the reality of adulthood by creating a culture that emulates the real world.

This father created jobs for each of the children to do around the house that would earn them a paycheck. He also implemented what he called the “Dad Tax.” Before each paycheck was distributed, he took out a 25% Dad Tax that went straight into the child’s savings account. Around tax time, he gave each child the option to have that money back as a “tax return” just like they would in the real world.

I didn’t know a thing about taxes until I was 20. How cool is it that this dad took on such a grown up topic and implemented it into his home while his children were young?

What’s the takeaway?

  • Start the conversation. It’s never too early to talk to your children about debt and the huge impact it can have in their lives.
  • Your kids are already watching. Be mindful of your actions and try your best to lead by example with your own day-to-day financial decisions.

Bonus Reading: “Money-Saving Tips for First-Year College Students”

What’s one lesson you’d like your children to learn that will help them avoid the burden of debt?

Image Credit: Xochi Romero (UnSplash)

5 Chores That Teach Work Ethic Principles to Toddlers

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Here are five chores that teach work ethic principles to toddlers.

“Chore” is a curse word for some kids. Perhaps you dreaded them, too, in your youth. What your parents, grandparents, and teachers were really doing was instilling work ethic principles in you as you learned what it means to grow up.

Now it’s your turn to pass it on.

Why start when your children are just toddlers, you ask? Isn’t it a bit young? They may be a little too young for learning how to file taxes, but they’re absolutely not too young to learn about helping out. Chores for 2- and 3-year-olds teach work ethic principles in the following ways:

  • Kids learn to be part of a team.
  • They learn responsibility.
  • They form good habits.
  • They learn listening skills.
  • They learn that they’re not entitled to “all play and no work.”

5 Chores That Teach Work Ethic Principles to Toddlers

Each of these chores is simple enough for a toddler to do, even though some may require a parent’s help. Supervise each task. Focus on your child’s obedience in doing the task more than how “well” he or she actually did it. Then, celebrate the completion immediately and enthusiastically. If you pay for chores, then pay your toddler right away.

Clean up toys.

Setting a brief time at the end of each day to pick up toys can help children learn a new habit. I typically choose one area of the house and assign my 3-year-old and 2-year-old to specific items. For example, I’ll ask them to just pick up all the books or all the trains or all the puzzle pieces. That helps them hunt for exactly what they need to pick up.

Bring dishes to the counter after meals.

One day, I was sitting at the lunch table, surrounded by bits of food and dirty dishes. The kids were racing around the house, energized by their meal. I realized that the only way for me to get some help clearing the table was to teach my kids to do it, too. So we implemented a new rule that each family member should carry his or her own dish to the counter. I shadow my youngest to make sure he doesn’t drop something on his foot, but the kids took to it right away.

Make the bed.

Can we all agree that this is an awesome, lifelong habit every kid should learn? Consistency is key in all work ethic principles, but there’s something universal about starting the day with a made bed. Plus, for whatever reason, my 3-year-old gets so excited to enter her room at bedtime and find her bed all nice and neat, waiting for her.

Put away shoes.

Do you have a designated place for shoes in your house? We have a coat closet. The moment the kids walk through the door, the oldest knows to take off her shoes and place them in the closet. The youngest can’t usually take off his shoes by himself, but he knows how to put them in the closet – which counts as a win in my book.

Dust the furniture.

You know what my kids love? Dusting the house with one of those Swiffer Dusters. It’s the kind with the handle and the fluffy guy on the end that looks like a Sesame Street character.

Not only does it dust much better than my previous duster – a rag made from an old tee shirt – but the kids get a kick out of it. It’s light-weight, is easy for toddlers to use, and pretty much gets the job done.

You can even make it talk while your toddler works, if you’re feeling especially ridiculous.

(I highly recommend any toddler activity with “ridiculous” in the description.)

Find it here.

How old were you when you started doing chores?

Share in the comments below!

Image Credit: Ben White (UnSplash)

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3 Principles for Teaching Children Gratitude Lessons

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Image for teaching children gratitude lessonsWhether your income is $25,000 or $250,000, you have the same tremendous opportunity with your children. You get to help them shape their worldview as they wrestle with topics like entitlement, gratefulness, greed, and contentment. It’s not always easy, but gratitude lessons can sprout up from everyday moments, as we’ll see in today’s article.

Little conversations about money, life, and more can become common place on car rides, around the dinner table, or before lights out at night.

Getting started is the hardest part.

So here are a few conversation starters for you and your child.

3 Principles for Teaching Children Gratitude Lessons

1. Show them what they have.

One powerful way to help your children understand how much work goes into the things they own is to show them.

For example, pay for your groceries in cash the next time you’re all at the grocery store. Let them see the 50’s or 100’s you hand over to the cashier in exchange for your next week or two of meals.

Show them how you choose a product (i.e. whether it’s on sale, you have a coupon for it, etc.). Talk about why you don’t spend a great deal on certain products or why you’ve cut back on others.

Encourage your children to ask questions on the drive home. If they’re old enough to understand, talk about how many hours it took you or your significant other to work in order to pay for a month’s worth of food.

2. Be consistent with your “No” and explain why it can be a good thing.

Not all negative experiences for your children are bad. One of the greatest and most challenging gifts we can offer our kids is our healthy use of the word “No.”

For example, I recently won a large container of Tootsie Rolls in a guessing game at a family reunion. My 2-year-old knows they’re in the house, so he drew a simple conclucsion: Chocolate candy for breakfast. Every morning.

Did I say “Yes” to his requests? No. Did he ask again and wail when I turned him down? Yes. It would feel better to make him happy, but I kept saying “no candy for breakfast” because:

  1. I love my son.
  2. The Buddy the Elf diet isn’t going to cut it.

It’s the same with saying no to other things in your kids’ lives. Sticking with your answer – however difficult – will give them a healthy dose of boundaries if you also take the necessary time to explain your reasons.

Bonus Tip:

Sometimes, you can offer a positive alternative without giving in. If they want candy for breakfast, my answer could be “No, but if you finish your breakfast, you may have one later as a snack.” If my daughter is fixated on a new toy she can’t have, that gives us the chance to talk the cost of toys. We can discuss bringing some of her own money next time – or doing chores to earn enough for that item.
OR just stick with your answer. You don’t owe your kids a Disney experience at the store or the breakfast table.

Gratitude lessons can feel harsh, but, like I said, they can produce some terrific discussion opportunities between you and your child.

3. Show them how others live with less.

One way to really generate discussions about gratitude versus entitlement is to take your kids to a homeless shelter or soup kitchen. Hunger and poverty are so prevalent around the world. Children in stable living conditions don’t grow up understanding how other children suffer each day – unless someone shows them.

For example, Audra Rogers from Real Honest Mom did a brave thing for her 8-year-old son. After noticing a few cases of what she called “affluenza” in her son (acting entitled or ungrateful for having a lot of things), she loaded him into the car and spent the day serving in a homeless shelter.

Their experience was so powerful that Disney’s parenting blog, Babble, picked up Audra’s story and published it for other families to see.

Recommended Reading: “What Happened When I Took My Spoiled Kid to a Homeless Shelter” 

You can teach your kids about gratitude through experiences, conversation, books, and the like. I believe, however, the most effective gratitude lessons are simply taught by example. Easier said than done, I know, but the struggle yields a tremendous return: Children who love and appreciate the world in which they live.

When did you begin to understand gratitude as a child? Share an example in the comments below.

Sounds Like You Discuss Family Finances With Your Kids?

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Wondering if you should discuss your family finances with your kids? I think you should. Here's why.I had a conversation with a woman I know recently about money and kids. She made a comment about hiding her income tax papers from her kids so they wouldn’t come across any details of her and her husband’s income. ‘’I don’t want them seeing our gross income and suddenly thinking we’re rich and they can have anything they want’’- she explained. She and her husband make decent income and she is doing her best to hide this fact from her kids. She is of the opinion that children shouldn’t be involved at all with their money.

She and I differ. I think kids should very much be in the know when it comes to family finances. They need to know and understand how money works and where else can they learn (multiple times), with the security that is home? Though I have learned quite a bit about personal finances, it was all self-taught, as an adult. In the situation of this couple, she has a learning opportunity with her kids to educate them. She can, and should, teach them how far money really goes.

I read something once that said the easiest way to teach kids about taxes is to eat 30% of their icecream. She can start with this point. Show her kids the number on paper and then show how much is taken away in taxes. Now there isn’t as much money, is there? Kids think $100 is a lot of money when in reality you’re only taking $70 home for every $100 earned and of that $70 it gets split between food, housing, savings, and family activities it really doesn’t go as far as a child may think and they need to see this, not be sheltered from all finances.

Saving is so important. Both Long term and short term savings goals are not only vital to financial success but help prevent debt- one of the most important financial lessons you can teach your kids. Even though it may be your retirement goals, kids need to see how much work it is to reach this goal. Maybe you’re saving for their post secondary, show them. Let them know how much of your money you put aside every year for their future goals.

Financial education is not something we can assume they will learn outside of the home. Unfortunately they don’t learn enough about it in school, despite it being one of the most important skills a child will ever learn. Kids will appreciate the trust you give them in discussing the family finances. There are many ways you can go about actually having the conversations and you can release as many or as few details as you want. I’m of the opinion that it’s a family unit and though there may only be one or two income earners the money if for the family, the more transparency they better.

Do you share financial details with your children? If so, how much detail?

Will Having Another Baby Be Cheaper the Second Time Around?

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second childIn the last few months my husband and I are coming closer and closer to the conclusion that we will likely have another baby. Not for a few more years but if we have any control over the situation we would like to have another. More for the fact that we want our daughter to have a sibling. Both my husband and I are very close to our sisters and we want our daughter to have that relationship too. Though not the only reason, a big reason we’re choosing to wait to have more kids though is that kids aren’t cheap!

I really don’t think kids have to be as expensive as some would make them out to be but they’re still far from free. The two biggest expenses we need to consider is me being on maternity leave for upwards of a year (and losing some of my income) and daycare.

Preparing the Monthly Budget

 

Ideally we have another child at the same time our older daughter is preparing to start school. Once our daughter is in school she will no longer need full-time care and likely just a few hours in the afternoon until my husband and I are off work. This will save us hundreds of dollars a month for her current daycare cost. Having an older child in school while the younger is in daycare will definitely be the cheapest option in terms of saving on daycare costs initially.

As we come closer to preparing for me to be on maternity leave our monthly budget will look much better as we will have a significant amount of debt paid off as well. The peace of mind that comes with not having additional debt payments while on a reduced income will be great!

Saving on Baby Stuff

Most of the toys and baby items we bought and received as gifts for our daughter were very gender neutral which will save on upfront costs (and even if they’re not I have no issue with my potential son playing with his older sisters pink toys). There are very few baby ‘’items’’ we would need if we have another child. If we have a son we would need some clothes (most second-hand) as our daughter’s wardrobe is very girly and I draw the line at riding her pink motorcycle.

If possible, I will breastfeed again saving on formula and because we already own a pump and storage bags I wouldn’t need to re-purchase these.

Other than things like new savings account for post-secondary which will come with any future child, the other costs will be very limited. We will eventually need a second bed for him or her and some clothes, but because we have chosen to keep all of our current child’s things there is very little we actually need. Paying off our debt will also ensure I have a stress free maternity leave!

Did you spend less on your second baby than you did buying things for your first child?

Creating a 2014 Family Budget

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family budgetI’m a big advocate for having children participate in the family finances. Unfortunately children don’t get enough personal finance taught in school so it will be our responsibility as parents to prepare them the best we can.

I grew up in a very frugal house. My mom wasted nothing and was always on the hunt for a good deal but this doesn’t mean I had any true understanding of money. Sure I knew how to grocery shop on a dime and could sniff out a sale miles away but she never taught us how to budget, even though I knew she was doing it regularly.

Money itself was never really talked about. We had basic cable because she wasn’t willing to buy the full cable package we so badly wanted (this was pre-28464 channel options for cable) because it was simply too expensive and a waste of money. I wanted to know what ”too expensive” was and why it was a waste of money when her kids wanted, and would use, it. Because I didn’t totally understand, in my nine-year-old mind, I just though my mom was being a big meenie.

I plan on involving our children in the family’s budget. I want them to see where our money goes towards running a household and why we may not be able to afford something or what we may need to change in order to make room for a new category. If kids decide they want a cell phone and mom and dad aren’t willing to pay more than X amount of dollars per month (ie they will not be having a $75 smartphone plan under moms dime), I want them to understand why we simply can’t do it. If we decided to cancel cable as a family decision we, as a family would also decide how and where to reallocate the money. If the kids want to partake in extracurricular activities, they need to know how these decisions affect the family.

Obviously mom and dad get the final word (since it’s our money!) but I think its important to allow children young and old to have a say and gain and understanding of how the family is run.

With older children, as soon as they get a job of any kind, it will be important to sit down with them and map out how they will use their money, before the manage to go to a mall and blow it all at the food court. Decide together how much will be saved, what it will be saved for (maybe long-term for post secondary, maybe saving for something like a laptop) and teach the value of a dollar. I’m not suggesting they don’t eat their money at the food court as long as they understand they only have ”x” amount of spending dollars to last ”x” amount of time, they can do what they want with it! Instilling the understanding will be the hardest part.

Involve young children with the purchase of things for them. Tell them you have $100 to buy school supplies and bring them with you so they can see what exactly $100 does or does not buy. To a child $100 is a lot of money, allowing them to see how far (or not-so-far) that money actually goes is a great lesson to teach.

Instilling money lessons in our children is invaluable. They’re never too young and it’s never too late to start.

Do you budget as a family?