Last week, my 8-year-old daughter and I were taking a walk downtown and of course we had to stop by her favorite store -- the toy store. As she has so many times before, she immediately asked, “Mommy can I have a new Webkinz? Look -- they have the new mouse -- it just came out! I don’t have that one! Please!!”
Rather than my previous response -- "Money doesn’t grow on trees" -- I took a deep breath and thought about the consequences of this moment. My daughter is old enough to start learning the basics of money management. It is critical to her future that she realizes that money is about more than acquiring. So I said to her, “Gianna, Mommy and Daddy work very hard for our money. When we get that money, we like to make sure that we’re making wise decisions on where we spend it. Mommy and Daddy do several different things with our money. We save some for the future, we spend some, and we give some to our favorite causes.”
She looked at me quizzically and then asked, “But why do you have to work Mommy?”
“Well, first of all mommy likes to work, it’s something I enjoy doing. Also, when I work, I get paid for what I do. I earn money. In order to buy things, you have to earn your own money,” I explained.
This conversation made me realize how important it is that, as parents, we help our children understand the basics of money management. I’ve started having these conversations more often with Gianna and, in addition, we’ve given her a weekly allowance with which she can start making her own money decisions. I also try for the most part to be a good role model for her, so I am careful of the excesses I buy. If I don’t take it seriously, she’s not going to take it seriously.
As we all know, kids are constantly observing our behavior and emulating it -- including our money behavior. If we’re excessively spending on shoes, makeup and, in my case, Starbucks Green Tea lattes, then our daughters will learn to spend unconsciously on their favorite indulgence -- whether it be a Webkinz or candy.
If we can combine smart money talk, good modeling, and the opportunity for our children to start practicing managing their own money, we can rest assured that we’ve done what we can to prepare them for a sound financial future. Here are some practical tips for teaching your kids about the dynamics of financial wellbeing:
1.) Have an age-appropriate conversation about the basics of money. Explain that money is earned by working and that it must be saved for the future as well as spent on necessities and a few fun things if there’s money left over. Further, we give some of our money to causes that ignite the most passion for our family. All of this means that we must carefully plan where and when we spend the money that we earn by hard work.