9 Tips For Parents on Teaching Kids About Money

by | Mar 2, 2020 | Blog

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One of the biggest challenges we have as parents is ensuring our kids are able to look after themselves financially.

Not everyone is comfortable talking to their children about money, we hope this article gives some talking points that will make the conversation easier. The following are some prompts that parents can use to start the conversation about money with their kids whether they’re younger children, teenagers, or even adults!

We’ll start at the beginning…

Teaching Kids About Money

There are 3 questions that set a base for kids:

What is money?

Show your child coins and bills and explain their value, how they’re different. This can also help with basic counting and number skills, so you’re hitting two birds with one stone.

Where does money come from?

Correlate your work with your earnings. In a general way, you can explain that when your kids are at school, you are working to earn money so you can buy things for your family. 

What can money buy?

On top of a general clothing, food, etc. it’s important that kids realize and grasp that a home and/or car cost money to use. Things like utilities and filling up your vehicle’s gas tank are things that you can slowly introduce to your kids.

Teaching Teenagers About Money

With those basics, teenagers will find it easier to grasp the next 3 points…

How do you make money

Teens know what jobs are, but it’s more about putting it into practice. Chore Cards for example are very effective for younger teens! With them, parents can showcase that if work is more difficult, you get paid more. For example, a chore card for the living room might have dusting, vacuuming, cleaning the windows, and arranging the room nicely for $15. Cleaning the bathroom on the other hand: dusting, vacuuming, washing the floors, washing the toilet, cleaning the sink will merit maybe $25.

Once your teen is old enough, a casual job is a great way to teach them that the money you earn takes a lot of energy to gain and should therefore be spent wisely. That sentiment leads us to…

How to build a budget

Budgeting is a difficult discipline, even for adults! Teaching teenagers what a budget is and how to use it is a very important step in ensuring your children are prepared for the real world. Give them as much practice as you can! Pinterest has some great resources where you can get printable worksheets. Doing a budget alongside your teen and checking in on it monthly will help them get into the habit of doing it themselves (and will keep you on track too)!

Why it's important to save money

Not only is a rainy day fund important, but having money in the bank to go on their high school grad trip, or be able to live in a nicer residence building if they decide to attend university. Show the fun side of money so that saving seems less of a chore and more of an investment for their future.

Teaching Young Adults About Money

Credit Cards 101

Explain the importance of building credit, what a good credit score will get them, how to spend on their credit card, and more importantly how to pay it off.

Understanding Interest

Many young adults don’t fully understand the impact that interest can have on their finances. It’s extremely important for new adults to understand interest and why making payments on credit cards or loans should be a top priority.

Good Debt vs Bad Debt

Good vs Bad Debt is a big topic to undergo, but it’s important for young adults to understand it. 

  • Good Debt usually has lower interest rates and will give you some kind of return. (Rental Property Purchase, Student Loan)
  • Bad Debt is when you purchase something that quickly or immediately loses its value and doesn’t generate income. (Auto Loan, Credit Card Debt)

The Final Point:

Making a lot of money in a career does not necessarily guarantee financial stability. Financial stability is about how money is spent, not how much you get. 

There are many other money topics that are important to teach your kids, like about investing and saving for retirement, but these first few tips should help get the conversation started. At the end of the day, your kids will be grateful you took the time to teach them about money – even if sometimes it gets challenging, it’s ultimately worth it. And who knows? Maybe you’ll learn a couple things along the way! 

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