Knowing about money and money management is extremely important. We all know that.
Why, then, do the majority of parents fail to teach their children about it?
How can we expect young adults to make smart financial decisions if they were never taught what smart financial look like?
The conversation can seem very big and very intimidating.
What do I tell my kid? Where do I start? What's most important?
Start with the basics.
When your child is young...
- Use a clear piggy bank - Being able to see the money in the container makes a much bigger impact. They get to see the money grow and shrink.
- Set an example - Show your child what smart financial decisions look like through your own actions.
- Show them cost - Don't just tell them how much something costs. At a young age, cost doesn't mean much. Instead, take them over to their clear piggy bank and have them remove the $5 they want to use on a toy, and then let them spend it.
When your child is a tween...
- Show them cost consequence - Show them that spending money on a toy means that they can't get the new, trendy shoes. Every expenditure means that another expenditure is ruled out.
- Make them earn allowances - Make them work for their money. Don't just hand them $10 every week. Make them mow the lawns, do the laundry, take out the trash, etc. Show them that money is earned, not given.
- Teach them to give - Giving to the less fortunate is very important, so help them find a person or organization that they can help.
When your child is a teen...
- Give them a bank account - This is a good place for your child to start. Setting up a simple bank account is a good place for them to start learning more advanced money management ideas.
- Help them find a job - Much like earning their allowance, teens need to understand that all the things they want to do with their friends cost money, and that they must work for that money. Teens have weekends and school breaks free, so help them fill it with productive time.
- Teach them about credit cards - Teach them the dangers of credit cards and debt. With college and career decisions looming, managing money becomes even more advanced, and debt is a big part of that.
Read the full story at DaveRamsey.com
Listen to Gary and Shannon's full conversation with Justin Worsham on teaching your children about money right here!
To hear more of Justin's take on teaching children about money, and other parenting topics, you can check out all of his stuff at The Dad Podcast
Check out his episode with Dave Ramsey's daughter and author of Smart Money Smart Kids, Rachel Cruze.