Teaching money to kids: How to provide financial education for kids when you never got one yourself

Take a moment to consider the financial education you’re imparting on your kids. Is it a well-thought-out, structured series of lessons and milestones, or do you teach money to your kids on the fly? Do you have open conversations about money with your kids at all? Teaching money to kids is one of the most impactful ways parents can set their kids up for success early in life.

More than 30% of parents are uncomfortable talking to their kids about debt and saving for college. Many parents don’t teach money to kids because they don’t think they should discuss it with them. Others don’t have open conversations about money because they aren’t comfortable talking about the topic themselves. After all, more than 35% of parents feel they are only somewhat knowledgeable in handling their finances.

Many financial concepts are overly complicated, and it’s not always socially acceptable to talk about. Compound that with the fact that financial education often isn’t taught in schools and you’ve got a lot of parents who have never received any formal financial education who aren’t comfortable talking about money, let alone teaching it to their kids. Parents today have an opportunity to give their kids a better chance at grasping personal finance basics earlier in life, and at a better understanding than ever before. It starts with simple, open conversations.

If you’re not quite ready to have complex financial conversations with your kid, here are 5 ideas for teaching money to kids when you don’t have a strong financial background.

Read More: Financial Stress & How to Navigate Money Anxiety

Teaching money to kids without financial education 

Start young, focus on the basics

Financial writer Beth Kobliner says that kids as young as 3 years old can understand basic personal finance concepts like the difference between needs and wants and trading (or sharing). This means that even if you’re not having in-depth conversations about retirement and taxes, you can teach the concepts behind money.

1. Decision making

If you’re not comfortable discussing the details behind your real estate or car purchases, try pulling money out of the equation. How? Have a classic needs versus wants lesson.

Your child is no stranger to some version of the needs versus wants conversation: “No, you don’t need ice cream, a cell phone, credits for a video game, sneakers, art supplies, etc.”

No matter the age, consider having a candid conversation about your needs and wants as a parent. What decisions do you make between what you need and what you want? Your kid will appreciate the peek behind the curtain and have a better understanding of your money habits—which can help form their own healthy habits.

2. Why you work

Your kid understands the idea behind a job—the parent goes to work and earns money so they can buy the things you need. But do they really get why you work? Why you get up and do the work you do every day? That you spend a lot of your time earning money, compared to their most important priorities of going to school and extra-curriculars.

This conversation is not about economics or hard personal finance skills. It’s about your philosophies and the life you imagine for your child. You don’t need a degree in finance to be able to instill the values of hard work and dedication with your kid.

3. Spending, Saving, & Investing

Boil it down to its simplest categories, your budget puts money away to spend, save, and invest. By the age of 9, your kid likely understands basic concepts behind each, but do they understand why you put away money into each, and at what rate?

If you’re comfortable sharing, take some time to walk your kid through your budget to explain where your money goes.

How much do you put toward your bills? To groceries? To spending money? To their allowances? Walk them through your categories and help them understand why they have the gadgets and spending money they have because of your budgeting.

If you’re not comfortable sharing your budget, or you don’t think your kid is quite ready for receipts and spreadsheets, consider talking to them about the budgeting rule of 50/30/20. Many personal finance experts recommend following the 50/30/20 rule to split your income into three categories:

  • 50% of your income toward your needs
  • 30% toward your wants
  • 20% toward your savings

Read More: How Much Should You Save Monthly

4. Encourage your kids to learn on their own

Teaching money to kids does not have to be a dry kitchen table conversation. There are opportunities to have conversations about money all over the place, even when 47% of parents admit they miss these chances. Your kids are likely already learning the basics of money management on their own through video games, lemonade stands and crafting, or through fundraising at school.

Every kid wants to feel older than they are, so these real-life examples are chances for them to handle money without major consequences to their actions. Get involved with these activities with them to help them see what happens when they keep working at it.

5. Learn together

Okay, so you’re not the best with your money. Perhaps you can’t comfortably explain the difference between an IRA and a 401(k). Maybe you knew the difference when you took that finance class 15 years ago, but you’re a little rusty nowadays.

Whatever the cause of your discomfort in teaching money to kids, there is no shame in learning (or re-learning) together. Consider carving out time every month to spend learning about a financial concept together.

Not sure where to start? Take a look at our introduction on Talking to Kids About Money, which breaks down financial conversations to have with your kid at any age.

If your child’s school doesn’t offer financial education, consider researching online programs or community college courses to join.

Making it count – financial education for kids

Teaching kids about money is at its core, about having conversations and making connections. You don’t need an advanced financial education to teach the basics. At the end of the day, your kid doesn’t care if you’re a genius with money. As financial writer Mary Hunt puts it in Raising Financially Confident Kids: “If you make a concerted effort to teach your kids about money and debt, they will walk into an adult financial world with the abilities they need to hold their own.”  And that’s a win for any parent.

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