Tl;dr: Kids pick up financial habits early, real early, so the sooner you can start to talk to and teach your kids good money habits, the better off they'll be when they venture into the world on their own.
Tell me if this sounds like you.
It's the first week of December and I've already spent too much money on the holidays. 😑
This year, my whole family is going to be together. Between travel, revelry, and wanting to spoil everyone, my credit card has taken a hit.
The difference from past years is that I've planned for this ahead of time. So while there has been a dip, I'm ready for the spending season.
Past years, not so much.
Like most of us, I've done the "no, no, no, no" dance in January when the oversized credit card bill arrives.
All those painful Januarys. So unnecessary.
How sad that with some relatively painless planing, everything could have been so much easier.
So why do so many of us learn our money lessons the hard way?
I've always wondered, why didn't we learn this in school?
Most of us would see as High School as the right time for this financial education. The period when we're butting up against independence, nearly ready to leap into full bloom adulthood.
Shouldn't financial empowerment be at the top of the list for things to teach 16, 17 & 18yr olds?
After all, money will touch everything we do from that point forward and aren't we savvy enough at that age to learn and retain financial information?
Turns out, High School may be too late!
Child development experts believe our financial habits, and our attitudes towards spending and saving form much earlier. By age three, kids can grasp basic money concepts and a growing body of evidence that suggests that financial habits are fully ingrained by the age of seven.
Ok, let's be clear, it's never too late to learn, but it always helps to start early.
So, with the hope that others can learn sooner than I did (and I think most of us), what better time to start than during the spendtastic holiday season.
Here are five things you can do with even young kids to start them on the road of being money smart.
To a kid, being told to save — without understanding why — may seem pointless.
By talking with your child (or children) and identifying a savings goal, you lay the foundation to keep them motivated. With that goal established, help them break down the path forward into manageable bites.
If they're going to buy a $60 video game and they get a $10 allowance each week, help them figure out how long it will take to reach that goal, based on their savings rate, all the while reinforcing how positive it is to work towards what they want.
Part of being a better saver means knowing where your money is going. If your children get an allowance, have them write down the purchases they make. Adding these up at the end of the week (or month) can be an eye-opening experience and provide valuable learnings.
Encourage them to think about ***how they're spending*** and ***how much faster they could reach their savings goal*** if they were to change their spending patterns.
Even if they're spending every dollar, the sooner they gain an awareness of how money is moving in and out, the better their future decisions become.
For most kids, it will be years before credit is even on their radar. The lesson of not living beyond your means is one they can't learn early enough.
Is there a big purchase your child wants to make this holiday season? Are they getting impatient, waiting for their savings to grow? Take the opportunity to play creditor and teach the value of saving differently.
For instance, if your child wants to purchase something that costs $150, you could "lend" the money and require payment from their allowance, with interest.
The lesson you want to teach is that saving may mean waiting, but the thing you want to buy won't end up costing more.
Money touches everything in our world — from eating, and shopping, to travelling and buying a home. As an adult, we face making financial decisions daily.
Include your child in those decisions. For instance, talking to your kids about how much things cost, quizzing them on a range of pricing and explaining the rationale for purchasing one brand over another will provide context to decisions around money.
Explain why we look for deals or buy items in bulk, anything to round out the thinking in how you're shopping.
Give your child some money, like $5, in a supermarket and have her make choices about what fruit to buy, within the parameters of what you need, to give them the experience of making choices with money.
By encouraging your kids to put a portion of every dollar they receive into a giving or charity fund, you start to teach them about sharing, kindness, and how money — whether it's $1 or $10 — can be used to help others.
We suggest starting with 5-10% of their allowance, enough to make a difference, and initially low enough not to be seen as putting restrictions on personal purchasing goals.
Eventually, they'll see how giving doesn't just affect the people they give to, but the giver as well.
At Treasure, we're building a better way to help kids get good with money.
Our soon to launch app and debit card, make learning about money fun and comfortable, with tools for both parents and kids to make the process easier.
We'd love to tell you about it; we'd love even more to show it to you and get your family early access.
If you share with us your email, we'll get you set up right away.