Children are not born with “money sense.” They learn about money by what they see, hear and experience. As they grow, children are watching, listening and learning about money. As a parent, relative or caregiver, you are teaching the children you interact with about money.
Whether parents realize it or not, they influence their children’s attitudes and values regarding money. How parents spend, borrow, save, share, invest and protect themselves creates an understanding for children about what is financially important. Parents can help children understand money matters by letting them take part in regular discussions about using family income.
Learning as a Family
Meeting together as a family to discuss money management and financial issues can help children learn:
- The difference between needs and wants.
- Resources, including money, are limited.
- Planning helps the family use money more effectively.
Family members should agree on how income will be used, set financial goals, plan how to reach their goals and work together as a team. All family members contribute to the economic wellbeing of the family through a combination of work (both inside and outside the home) and effective use of family resources (time, money and energy) to meet needs and wants. Guiding and supervising money choices rather than directing and dictating how to save and spend money is important. Praising rather than criticizing, complimenting their positive efforts and not being overly critical of mistakes helps as well.
Mistakes are a part of the learning process. Parents should not use money to reward or punish for such things as grades or behavior, or to pay for regular family chores. Routine work in their rooms or with laundry, meals and cleaning around the house should be an expectation of all family members, including children.
Tools for Teaching
Another way to teach children about money is to read and discuss books about money. The Consumer Finance Protection Bureau has developed the program Money as You Grow: Help for parents and caregivers. This program provides a list of books that incorporate money skills and provides guides to help explain the key ideas.
Help young children understand that money is a limited resource. Explain that they cannot buy all the things they want, but with planning, they can have all things they need.