10 Money Tips To Teach Your Kids While They’re Young

We’ve talked about how to recover your bad credit before. It’s inspiring when someone can pull themselves out of a credit slump, but it’s also far too common, particularly for young people. And it’s not even that identity theft is on the rise – a study done by ING Direct found that 83% of teens don’t know how to manage money. Based on the annual survey for the National Financial Educators Council, 75% of young adults are unprepared and fearful of handling their finances. THIS is a problem we can fix. Why don’t we?

Why Kids Need Help Understanding Money

You’ve probably heard the debates about requiring financial literacy courses before graduating from high school. That sounds like a great idea. Of course, such courses would require funding and thus far, as of the update on 11/23/2021, only 10 states offer a financial literacy course to high school students. The other brutal reality is that millions of Americans struggle with money on a regular basis. Some 78% of people live paycheck to paycheck, and 73% are in debt.

Help Your Kids Understand Financial Literacy

If someone had told me that I needed to learn about financial literacy when I was 18, I probably would have thought they were insane. What’s there to really know? There’s money. You either have it or you don’t. I worked after school when I was in high school, but I never saved much. I used the money to eat, buy clothes for school, and to support my addiction to books.  

Financial literacy is more than just knowing the value of money – it’s about budgeting, borrowing, investing, understanding taxation, and managing personal finances. I heard the rumors about those distant cousins who went off to college, signed up for credit cards, and charged them up to the hilt. Then, when I went to college, there were kids who brazenly bragged about how they blew their loan check, financial aid dispersal, and every other penny they could scrounge up on partying or that new car. It wasn’t long before at least a few of those kids were sleeping in their cars or couch-surfing.  

Help Your Kids Understand Why Financial Literacy Is Important

There are several reasons why financial literacy in young people is important to me. For one, I was woefully ignorant about how to manage my finances when I graduated from high school. I did learn how to write a check, but as it turns out, that life skill doesn’t come in handy very often these days.

I think it’s fair to say that my relationship with money and my financial literacy has evolved over the years. I wish I’d known then (back when I was 18) what I know now.

The other reason financial literacy is so important to me is that I don’t want my kids to face the same struggles I did. I want them to understand what money is, what it can do for them, and what the limits are. So, in a sharing vein, I want my kids to understand the value of money, what it’s for, and how to use it.

Help Your Kids Understand The Difference Between Want And Need 

As an adult, it’s often not hard to tell the difference between want and need. In the need category, you’ll find rent (a place to live), gas and insurance money (to get to work and college), and those other few essentials like a supply of Ramen noodles. For a broke college student like me, everything else was categorized as a want. Everything seemed so much simpler.  

One of the things I’ve tried to teach my kids is there is a difference between want and need. The basics are still the same. Each of us needs a place to live, a way to get around, and food. My kids also need clothes, a laptop for school, and a few other necessities to function at school and prepare themselves for their futures.  

Help Your Kids Understand What Credit Is 

Some adults still haven’t figured this out yet, but credit cards are not the magical token that will buy every high-tech gadget, toy, or experience without cost or obligation. There’s that moment when your child says they want a toy, game, or other objects, and you tell them, “No, it’s too expensive. And, you don’t need it.” They say, “But, you’ve got your credit card.” 

That’s the perfect opportunity to talk about how credit cards work. It’s not free money. You’re just borrowing it for a little while. You must pay it back (with interest), and you should never overextend yourself. If you’re late with your payment, you don’t pay it back, or you overextend yourself, you face penalties just like you would if you borrowed a book from a library.

Help Your Kids Understand What Things Cost 

Kids start with play money in elementary school, but the best way to teach them about the cost of things is to allow them to work to earn an allowance. Then, they decide how they want to spend their money. Depending on what they receive from grandparents, friends, and relatives for holidays, birthdays, and milestone events, they can also add that money or gift cards to their earnings.  

We discuss what they want to buy with their money. Part of the discussion is the cost, what’s included in the cost, whether they will have to save up to buy what they really want, or whether they will buy something else instead. We look at the item online and in the store, if applicable. We also use the Teen Amazon Account, which allows relatives to gift an Amazon card, which can then be redeemed for item(s) on Amazon, with approval.  

Help Your Kids Understand How To Find The BEST Deal

As part of our discussions about money, what they want to buy, and whether they will need to earn more, we also talk about sales, great deals, and reviews. I ask them, “Did you look at the reviews?” What do they say? What are the ratings? Are there better options with better reviews? Beyond the quality of the product itself, we also talk about where and when to buy it.  

We use sites and browser extensions like Honey and Slickdeals to compare deals, snag coupons, and research the price history. Does it look like the price will go up or down? If it will probably remain steady, is there any rush to buy the product now? If there are coupons, when do they expire? Of course, a lot of the research depends on what they want to buy and the urgency around when they want or need it. We also discuss what goes into my decision-making process when I buy groceries and other products.  

Help Your Kids Understand When To Use A Credit Card

Credit cards are not always a bad deal. You can earn cash rewards, raise your credit score, and be more secure with your transactions. Over the last few years, many businesses stopped accepting cash or they discouraged it by requesting the exact change. So, while credit cards may have once just been a convenience, it’s now more important to understand how to properly use them, without falling into debt. Here are a few resources that can help. 

• Credit Card Education for Kids | CESI

• Kids and Credit Cards: 7 Things Parents Need to Know

• Tips for Talking to Your Kids About Credit Cards

Help Your Kids Understand Savings

Research shows that 95% of young people have no savings. That trend hasn’t improved much with the pandemic. Some 14% of Gen Zers (ages 18-24) saved money in 2021. Only about 22% of Gen Xers (ages 41 to 55) saved any money. Some 47 % of men saved money compared to 31% of women in 2021, which is due to earning less money, investing less, taking a career break, and having lower lifetime earnings. 

If the last few years have taught us all anything, it’s that life is full of uncertainties. Our kids are learning those hard lessons right along with us. So, even as money, credit, savings, and value become ever more complicated, we need to teach them to save money for unexpected emergencies and unforeseen situations.  

Let’s Talk About Money

Money is just a means to an end. I think about the cliché, “Money doesn’t buy happiness.” But then, it does pay the rent, making sure there’s a roof over our heads. We talk about money: how to save, earn, invest, and spend money. I want my kids to learn from their mistakes with money in a safe space. I want planning and decision-making and deal-searching to be part of the process.  

I also want them to know that I’m here to help them figure it out, whether it’s trying to find the best deal, coming up with creative ways to earn money, making a budget that will work, saving for college, pursuing grants and scholarships, navigating everything else related to money and finances, and braving the big world out there.  

What money tips have you taught your kids? Share your story in the comments below!

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