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15 Mom-tested Tips to Teach Kids about Money and Finance

Photo credit: Ambro (with text added by me)

A couple of weeks ago I was asked to speak on the topic of teaching your kids about money and finances. I love this subject and got really excited. I mean, I’ve been married to Cap’n Coupon for fifteen years. So I spent some time doing research and created a list of talking points. Then I had a sudden and severe allergic reaction, took way too much Benadryl, and spent the whole time babbling about how kids shouldn’t be spoiled and entitled. You can see the clip here.

After the anti-histamines wore off, I looked back over my unused talking points and realized I was missing some stuff. So I asked the most intelligent and attractive women on the internet what ideas they had. Rants from MommyLand’s readers did not disappoint. I sifted through hundreds of comments on Facebook, Twitter and the blog and added their input.

So here are 15 mom-tested ideas on how to teach your kids about finances and money:

  • Model good financial behavior. 1 of 15
    Model good financial behavior.
    If you're bad with money, your kids will learn from that. It's like every other aspect of parenthood - you have to be better than you want to be to set a good example. Focus on making smart, reasonable choices. Try to limit impulsive spending. When it is time to make a big purchase, show them that you're researching the type of item you're going to buy. Discuss how you're weighing things like cost, reliability, and value in your choice.

    Maybe you feel like there's no way you can live up to role model standard. I totally get it. But it's still important to talk about the right way to plan, save and spend, even if you can't always do it yourself. Do you eat super healthy every day? Probably not. But you probably are doing what you can teach your kids about how to eat right and get enough exercise. Same thing.

    photo credit: Ambro.
  • Talk about money openly with your kids. 2 of 15
    Talk about money openly with your kids.
    It's important to be open and honest with your kids when talking about money, but not so honest that they get freaked out or scared. Explain to your kids why you make a budget and why you make certain choices. One of our readers discussed how her parents never said "we can't afford this" when they thought something was too expensive. They would say "a new car this year would be placing a value on having something fancy instead of making a smart choice. If we want something really nice, we'll wait, save, and get it next year."

    If you make some mistakes, it's OK to talk about how you'd like to do things differently next time and what is involved in having to fix those mistakes. I plan on being brutally honest with my kids about that time in college when I bounced a check to buy a pizza and ended up spending $10 per slice.

    photo credit: David Castillo Dominici.
  • Seize every teaching moment. 3 of 15
    Seize every teaching moment.
    Seize every teaching moment. When your child asks why she can't have Ugg boots, show her the difference in price between the real thing and the Target knock-offs. When you're in the car and hear an ad about a place that cashes payroll checks, explain what that means. Taking a couple of minutes to explain things when they crop up results in your kids, over the years, having a comprehensive sense of how you approach finances and money.

    photo credit: Ambro.
  • Make sure its age appropriate. 4 of 15
    Make sure its age appropriate.
    The difference between what my 9 year old understands about money vs. 4 year old is huge. When you decide to talk about money or set up a chore system, make sure it's reasonable for the age of your kiddo. My oldest can calculate interest rates, while my youngest still doesn't grasp the real difference between needs and wants. In this, as in all things with parenting, one size does not fit all.

    photo credit: Stock Images.
  • Try and teach kids about relative value. 5 of 15
    Try and teach kids about relative value.
    Have kids actively participate in shopping. They want a 12-pack of pre-packaged Goldfish vs. the big box? Have them look at the cost of both and show them how much more they get with one vs. the other. Let them know the total food budget for the week. Let them see how much milk costs. Teach them the value of the things they see every day and take for granted. When I told my 7 year old son that every time I fill up our van with gas, it costs about the same as a big Lego kit - his mind was blown.

    photo credit: ImageryMajestic.
  • Find a system that works for you and be consistent. 6 of 15
    Find a system that works for you and be consistent.
    Some families think kids should not be paid for chores, as they should be helping out anyway. Other people think - no chores, no allowance. It's totally up to you. Use a chart system. Or checklists. Whatever you think your kids will respond to best.

    The key is to clearly communicate the system to your offspring and to be really consistent in your follow through. Many of our readers said they hit walls when they didn't have cash for allowance at the end of the week or when things got busy and they didn't follow up in a timely way.

    photo credit: Fancy Schmancy Notes Shop on ETSY.
  • Theres an app for that. 7 of 15
    Theres an app for that.
    There are some great websites and apps that can help manage your kids allowance and savings (without using cash). Some also help kids learn about how to manage savings.

    Here's an article from the New York Times that lists several good options. Click here!

    Here's a post listing five free (or low cost) apps that help manage allowance. Click here!

    Here's a post listing five free (or low cost) apps that help manage chores. Click here!

    photo credit: The Mac App Store (cut and pasted together by me).
  • Make your kids spend their own money. 8 of 15
    Make your kids spend their own money.
    Nothing will make your children rethink spending money faster than having to spend their own. Tons of our readers agree - it works like a charm. Oh, you want that new game for the Xbox? Sure, you have $20. Buy it yourself. Oh. You need to think about it now? That's a good choice.

    photo credit: David Castillo Dominici.
  • Make them work for what they want. 9 of 15
    Make them work for what they want.
    Work with your kids to help them earn the big things they want. Instead of just passively waiting for Christmas or their next birthday, help them set a goal and work towards it. It could be the Lego Death Star or an iPod touch, help them plan for how to get what they want.

    They may be skeptical at first. But work with them. How much does the item cost? Can you buy it cheaper on-line or refurbished? Help them figure out ways they can earn money and how long it will take for them to reach their goal. Once they know what it will take, their pride in doing it for themselves may outweigh their initial objections.

    photo credit: David Castillo Dominici.
  • Help them manage their money. 10 of 15
    Help them manage their money.
    It can be a big bone of contention, especially among older kids. Should parents control their kid's money and savings? It's not that easy an answer. If a child worked hard to earn their money, should they be able to spend it on whatever they want? I say yes, but with a caveat. Parents should help kids make good choices and protect them from the consequences of bad ones. Not all bad consequences - but certainly serious ones.

    Sometimes dealing with the consequences of a bad choice can be a really valuable life lesson. But if you see your child about to make a decision that's really bad or is going to result in long term problems - it's your job to step in. 

    photo credit: David Castillo Dominici.
  • Get the whole family on board. 11 of 15
    Get the whole family on board.
    Once you've decided what approach you want to take with your kids, it's time to talk to them about it. Make sure they understand what you're doing and why you're doing it. Let them offer some input as to how things will work with chores, allowance and spending. Keep in mind that not everyone in the lives of your children is going to take the same approach to money, finances, and spending as you are. It's important that you have a chat with your ex (if you co-parent), or with grandparents and other family who spend time with your kids.

    photo credit: David Castillo Dominici.
  • Place a value on planning. 12 of 15
    Place a value on planning.
    I used to be a planner. By that I mean, it was my actual job. Now I'm a proselytizer for planning. IT IS SO IMPORTANT. And kids need us to show them that things don't just happen by accident. They happen little by little, with lots of effort in between. Overwhelming goals become manageable and less scary when you break them down into smaller, sequential parts. This is totally true with earning, saving and spending money.

    photo credit: PhotoStock.
  • Use resources like Money As You Grow. 13 of 15
    Use resources like Money As You Grow.
    This free resource is the coolest and I can't recommend it enough. From their amazing, interactive website:

    "Money as You Grow, developed by the President's Advisory Council on Financial Capability, provides 20 essential, age-appropriate financial lessons—with corresponding activities—that kids need to know as they grow."

    Image is from the website Money as You Grow.org.
  • Hit the library. 14 of 15
    Hit the library.
    There are so many great books out there for all ages of kids. From story books for little kids to finance guides to teens. The website The Best Children's Books.org has a great and comprehensive list that you can find if you click right here!

    photo credit: The Best Children's Books.org (cut and pasted together by me).
  • Check out Dave Ramseys series for kids. 15 of 15
    Check out Dave Ramseys series for kids.
    Not everyone is a Dave Ramsey fan, but his series and system on teaching kids about money and financial responsibility was the most commonly mentioned tool that our readers wrote about. I've read some of his stuff for adults and found it to be very straight forward and helpful. The reviews on Amazon for his kids series "Financial Peace Jr." were largely very positive and while it's kind of expensive - how ironic, it seems comprehensive. If you like his radio show, TV show, or books for adults, its definitely worth checking out.

    photo credit: Dave Ramsey.com.

Please join me here once a week for more Rants in My Pants. You can also find me at Rants from Mommyland, on FacebookTwitterPinterest and Sweet Relish.

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