Parents often shy away from discussing money management with their children, but why? Is it because our parents didn’t talk to us about money, or is it just an uncomfortable topic? 

We prepare for important conversations about puberty and growing up from the moment our children are born, yet when it comes to money, many parents avoid the topic altogether. However, you don’t need to be a financial expert to start this conversation with your kids, and it’s never too early or too late to begin.

Start by introducing the concept of money: explain that money is real, it’s earned, and it doesn’t grow on trees or magically appear from ATMs. In today’s digital world, where physical cash is rarely seen, kids might mistakenly believe there’s an endless supply of money. To counter this, consider opening a savings account for your child as early as age six. Let them deposit their pocket or birthday money and allow them to withdraw it themselves. This hands-on experience will teach them valuable lessons about money management.

Giving your child an allowance is another great way to teach them about finances. Be clear about what the allowance can be spent on, and consider linking it to chores around the house. This not only helps them learn the value of money but also encourages responsibility. Children tend to spend money they’ve earned more wisely than money that’s simply given to them.

It’s also crucial to teach kids the difference between wants and needs. Setting boundaries early on helps them understand that they can’t have everything they desire, a tough but vital lesson. When your child is saving for something special, help them understand how much it costs and how long it will take to save up. To motivate them, you could match their savings when they reach their goal.

As children grow, so should their responsibility in managing money. For example, when my eldest daughter turned 15, we transitioned from a traditional allowance to a social fund. This fund was meant to cover her personal expenses, like clothing and outings with friends. Although she received more money each month, she quickly learned to make smarter spending decisions, balancing her desire to go out with friends against purchasing that coveted pair of jeans.

However, with greater financial responsibility comes greater risk. It’s essential to guide your children on how their money is being spent, ensuring their purchases are safe, healthy, and appropriate. By maintaining an open and honest dialogue about money, we can help our children develop strong financial habits and avoid the mistakes of previous generations.

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