I don’t remember my mom ever talking to me about money when I was growing up, but that doesn’t mean that I didn’t learn valuable money lessons from her.
I do remember that she always was frugal — not a tightwad, but certainly thrifty. She would wait for things to go on sale before buying them, repair things rather than toss them or replace them, and make as many things herself as possible. She even made my prom dresses, which were beautiful. Let’s just say she was crafty to the extreme, decades before sites such as Pinterest made being crafty cool.
Watching how she always looked for ways to save money rubbed off on me. Even though she didn’t tell me how to be financially responsible, she showed me.
Most moms are in a unique position to help their kids learn about personal finance. Because they spend nearly twice as much time, on average, with their kids than dads do, according to a survey by Discover Financial Services, moms potentially have more opportunities to take advantage of teachable moments.
In honor of Mother’s Day, here’s what moms can teach their children about money through the unique kinds of conversations or opportunities they have over the course of a typical day with their kids.
1. How to Earn Money
Kids quickly understand that money buys things, but it’s crucial to teach them that money doesn’t appear out of thin air — it has to be earned. Moms can introduce this idea by paying their kids to do things around the house.
Given that moms spend nearly twice as much time as dads doing household chores, according to the Discover survey, it makes sense that they ask kids to pitch in and help. For example, Kimberly Foss, president of Empyrion Wealth Management, author of “Wealthy By Design” and mom of four, said that she pays her son an allowance for completing chores. Some parents don’t like tying allowance to chores, so they give their kids opportunities to earn money by doing extra work on top of their chores.
When they’re old enough, you can require your kids to get a part-time job to help pay for their clothing, a car or college. Regardless of the approach you take, the key is to give your kids a chance to earn money so they’ll be motivated to work for money and will have a chance to manage money on their own.
2. How to Stick to a Budget
One of the core concepts of personal finance is budgeting, yet plenty of people struggle with it. A 2015 GOBankingRates survey found that sticking to a budget is the top financial challenge for Americans. Moms are in a great position to teach the basics of budgeting, though, whenever they take their kids to the supermarket, for example.
For starters, always go to the store with a list when your children are with you, said Foss. Use a grocery list to show children that there’s a limit to what you will buy. Point out the difference in prices and let the children know you’re buying some things because they cost less and avoiding others because they cost more. “These comments will sink in,” she said.
As kids get older, you can give them more hands-on experience with budgeting by giving them a certain amount of money for back-to-school shopping, for example. They’ll learn that they can’t spend more than they have.
3. How to Spend Less
It’s easy to survive on a lot of money, but Winnie Sun — founding partner of Sun Group Wealth Partners and mom of three — said, “I’d rather my children learn how to survive on little.” She takes every opportunity to teach her children how to cut costs and find the best deals.
If her kids see something they want at the toy store, for example, she doesn’t allow them to buy it on the spot. They have to go home and talk about whether it’s something they really want and then compare prices online to find the best deal, she said.
Because moms tend to make a lot of the household spending decisions and often pay the family bills, they’re in a good position to teach their children what they know about ways to spend less, said Janet Bodnar, author of “Raising Money Smart Kids” and a mom of three. In fact, a 2015 survey by coupons and cash-back site BeFrugal.com found that 85 percent of Americans said their mom taught them to be frugal and careful about spending.
Moms can emphasize how to make financially beneficial choices by explaining why they shop at one store versus another, showing kids how to compare prices and explaining how coupons work, for example. “Those are all teachable moments they can take advantage of,” Bodnar said.
4. How to Save More
Kids have plenty of opportunities to see how spending decisions are made during shopping trips with Mom. But mothers also need to teach their children the importance of saving. “Kids need to know that moms aren’t just deciding which cereal to buy but also where to put retirement money,” Bodnar said.
You don’t have to introduce the concept of retirement to young children, but you should teach them from an early age about delayed gratification and the benefit of setting money aside for the future. One of the ways moms can do this is to give kids a glass jar with a picture of an item they want taped to it, Foss said. Children can collect money they receive through allowance or gifts, watch it accumulate in the jar, and be reminded of what their goal is by seeing the picture.
Foss said that she requires her 11-year-old son to save a portion of his allowance. Her talks with him about the importance of saving inspired him to start a car fund at age 8.
To help motivate him — and demonstrate the benefit of taking advantage of matching contributions to a 401k from an employer when he’s older — she promised to match up to $5,000 in his savings for the purchase of a car. “If we teach these things early and often for children, they will be good stewards of money,” she said.
5. How to Give
A greater percentage of women than men volunteer (about 28 percent versus 22 percent, respectively), according to the Bureau of Labor Statistics. And the Women’s Philanthropy Institute at Indiana University found that women give more than men at all income levels.
When moms give their time and money, they should take advantage of those moments to teach their children about the value of helping others. Rather than collecting your children’s unwanted toys on your own, ask your kids to select items to give and explain that they can be donated to children whose families aren’t fortunate enough to afford new things. My 4-year-old son was willing to part with some of his toys he rarely played with when I explained to him that other children might enjoy them.
As they earn or start receiving money of their own, you can introduce the concept of financial gifts or tithing to your place of worship. Foss requires her son to save 10 percent of his allowance for charitable contributions, for example.
6. The Difference Between Needs and Wants
Kids won’t hesitate to tell their parents what they want, so moms can take advantage of those moments to explain the difference between needs and wants and how money must be spent on needs first. In fact, more than half of adults surveyed by BeFrugal.com said it was Mom who taught them how to realize the difference between a want and a need.
Foss said that when her son recently said he “needed” a phone, she used the opportunity to help him identify what he truly needed. They came up with a list of things such as shelter, food, and transportation that their family must pay for, and she pointed out that everything that wasn’t on the list was a want.
If children don’t learn the difference between a need and a want from an early age, they’ll have a hard time prioritizing their spending as an adult, Foss said.
7. Why It’s Important to Make Trade-Offs
Kids need to learn that their parents don’t have an infinite supply of money. But that doesn’t mean that you have to be the mean mom who always says no.
Sun said that when her 7-year-old son recently asked for a Wii gaming system because a friend of his had one, she asked him how much time he would actually spend playing with it and whether there was something he would value spending time — and money — on more. Because he loves amusement parks, he agreed that he’d rather spend his time taking advantage of the season pass to Knott’s Berry Farm theme park his mom had already bought.
When kids complain that they want the things their friends have, moms can use the opportunity to explain what their family values most. If it’s experiences, for example, you could say that if you bought a lot of stuff, then you wouldn’t have enough money to take fun family vacations. Explaining the trade-offs you make will equip your children to make financial decisions on their own, Sun said.
When moms take advantage of all of these teachable moments to help their children learn about money, “the opportunities are endless,” Bodnar said. They can arm their kids with the knowledge and experience they need to be financially responsible adults.