Have you been stressed during budget conversations? Are you anxious at the grocery store checkout when you hear the total? Do you seem to be buying more and more stuff to make yourself feel better about everything?
Kids pick up on these things, and this is a valuable time to teach money lessons that will stick with them forever. The reality is not only can you be their teacher, you will be whether you think you are or not. They’ll learn how to handle money from the way they see you handle it. Remember, more is caught than taught. Here’s what I recommend when teaching your kids about money:
Share, but don’t scare
The example you set is huge, but don’t be afraid of having conversations about money with your kids. If your family is in a tough spot right now or experiencing job loss, be open about the fact your lifestyle may look different than it did a few months ago. Just be age-appropriate with the information you share.
When they’re older, they’ll remember you persevered during this time, and it will give them hope when they run into their own hard times. When your kids ask questions you don’t know the answers to, be comfortable saying, “I don’t know the answer to that. Let’s find out together!”
Hard times or not, talk to them about your family’s values. For example, you can tell them your family stays out of debt, so that’s why you cut back on spending. If you’re being intense about getting out of debt, set that expectation so they know why they can’t have the most expensive, name-brand cereal at the grocery store right now. Or talk about the fact that your family values giving, which is why you help the homeless and sponsor a less-fortunate family at Christmas.
Teach them that money comes from working
Here’s a trick from our family’s playbook: Don’t give your kids an allowance. Let them earn a “commission.”
The money that comes from mom and dad should be the result of some type of work. This will help them understand the cause-and-effect relationship between work and money. My parents did it, and to this day, I genuinely enjoy working. I love checking things off lists, doing well at my job, and feeling that good kind of tired after a hard day’s work.
Budget for giving, saving, and spending
You can start your kids on a budget with these three simple categories: giving, saving and spending. It’s the most basic form of budgeting. My parents labeled envelopes with those three words. You can even let your kids decorate each envelope. Then, every dollar they earn as commission gets spread across those envelopes. You can even apply this to birthday or gift money they get throughout the year.
No one is better equipped to teach these foundational money lessons. I’ve even got some free resources to help. You can do this!
As a #1 New York Times best-selling author, host of The Rachel Cruze Show and The Rachel Cruze Show Podcast, Rachel helps people learn the proper ways to handle money and stay out of debt. She’s authored three best-selling books, including Love Your Life, Not Theirs and Smart Money Smart Kids, which she co-wrote with her father, Dave Ramsey. You can follow Cruze on Twitter and Instagram at @RachelCruze and online at www.rachelcruze.com, youtube.com/rachelcruze or facebook.com/rachelramseycruze.