How I Teach My Kids Financial Responsibility — and So Can You

This dad is putting his kids on the right financial path.

My parents never liked talking about money. They felt that kids should focus on school, while parents focused on the finances. We shouldn’t be burdened with money because there was little we could do about it.

It took me quite some time to get over the anxiety of spending money. For decades, my parents instilled in me through their actions that money was a precious resource that couldn’t be squandered. As immigrants with no family nearby, our safety net was much smaller and each dollar was much bigger.

Click to read more about seven apps to help you teach your kids about money.

I don’t want my kids to learn about money the way I did. That’s not to say that I’m going to constantly hover over them, making sure they understand the difference between a need and a want, or nag them about the importance of savings. But I want them to view it as a resource, not as a source of anxiety.

Kids are very observant. My kids have watched the way I react or talk about certain things and internalize those inadvertent messages. For example, if I seem stressed about getting a certain bill in the mail, my children may think that money is scary or that bills should be avoided at all costs.

It doesn’t matter how young your kids are, you can start instilling financial responsibility today. My kids may be just 5 and 7, but I know that what I’m teaching them now will have an impact on them as adults.

Here are a few ways we’re teaching our kids financial responsibility.

Track Every Dollar

Since they were even younger, I’ve been teaching my kids budgeting, and it has taught them to see numbers as they are: just numbers. It’s important for them to see what is coming in and out so that they can see what they spent and not go overboard. I would hate for them to have no idea what they’re spending in their adult years, only to realize they’ve gotten themselves deep into credit card debt.

It’s still early for our youngest, but I plan to give them each a notebook where I teach them to write down money they receive, including allowances and gifts. They also write down everything they spend on. That way, when they want to purchase something, they’ll know exactly how much money they have and if they can “afford” it.

Learn Together: How to Keep Your Family on a Budget

Talk About Savings Goals

Whenever we visit Costco, my son marvels at a $200 drone for sale. He really wants one … until he gets to the Nerf cannons and bag of 5,000 water balloons. It’s a prime opportunity for us to discuss trade-offs and savings goals.

It’s probably not the best idea to talk about retirement and backdoor IRAs, but he gets it when we talk about the drone, Nerf cannons and water balloons. And that’s a start. After all, talking to him about these things now will help him avoid common, critical financial mistakes later on in life.

Be Open About Money

I don’t want money to be a taboo subject. Money is an important part of life, and not talking about it leads to fear and avoidance. You attach an emotional element to money that makes it an unhealthy relationship.

Instead of talking behind closed doors (except for some major decisions), my wife and I talk about things openly, like how much we spent on groceries and some of the trade-offs we’ve made. I’m also mindful about how I react to certain things around money.

If my kids ever have questions about money, I tell the truth in a way that is age appropriate. I’m OK with showing them bills so they know that things like electricity cost money. They aren’t responsible for them, but awareness is important.

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Don’t Equate Money With Happiness

Money is important but we don’t conflate it with happiness.

Whenever we’re doing something with the kids on the weekend, we always talk about types of activities that are fun yet don’t cost a dime. When we talk about birthday parties and having friends over, it’s a focus on the friends, not on the presents or anything else materialistic. We are still learning how to talk about money with our kids but we want to make sure we focus on the important things.

It’s important to have these discussions so that my kids can understand that financial responsibility isn’t just about staying under budget or being able to make millions of dollars. It’s about knowing that money is a tool to help us lead better lives; that can mean helping us be healthier, be closer to our loved ones or have fun. And, once your kids understand the why behind all the things you’re teaching them about money, they’ll hopefully be more responsible with it, too.

Click through to read more about things kids today need to know about money.