How do you teach your kids important money values? It’s a tricky question. The very subject strikes fear into the hearts of moms and dads everywhere.
There’s not a lot of straightforward guidance out there on how to teach your kids about saving and investing – or about what investment options exist for your kids. On this page, I’ll give you a summary of resources you can use to find out how to teach your kids about saving – and what options you have.
Teaching Kids Money Values
Teaching kids about saving money isn’t really about teaching them to set aside a part of what they make – although that is important. First and foremost, though, it’s about teaching a savings mindset. That means teaching them:
Teaching Kids Delayed Gratification
When my oldest son was small, he desperately wanted a Lego Death Star. He saved, and saved, and saved some more and finally achieved his goal. Now, about a decade later, this is the only toy from his childhood he still uses on a regular basis.
Teaching your kids about delayed gratification, and saving their money for things they really want, is important for their financial success in the long run.
Setting aside a portion of everything – The earlier you introduce this concept, the more likely your kids will consider saving to be a natural part of what you do. In addition to the Lego Death Star lessons, I had my oldest son read The Richest Man in Babylon when he was 10 or 11. He still remembers it today.
Teaching Kids Hard Money Lessons – And Advertising Awareness
Teaching kids about delayed gratification, smart shopping, and the evils of advertising is not easy. I find very few financial books cover this, even though these are the kinds of financial lessons kids will need through their entire lifetimes.
Evils Of Advertising And Your Kids
Advertisers target kids for a reason – they haven’t yet learned that advertisements aren’t real. Constant exposure to advertising creates a desire in kids for stuff they never would have known existed otherwise, and an increase in commercialism. Ads are pushed on television, on the internet, on YouTube, in magazines, and even in schools. Research has shows that ads have a substantial impact on childrens product preferences. As the parent, you need to teach them to be a critical consumer, questioning everything they’re told (or sold).
Teaching Kids Some Things Are More Important Than Money
When my great-grandfathers watch stopped working, my teenager was devestated. His great-grandpa had passed away when he was little, and although my son didn’t remember much about him, he was very attached to the watch. His great-grandpa loved him, and had big hopes and dreams to do things together. Even though those dreams didn’t come true, the watch bound them together.
Deliberate Deprivation, Increased Appreciation
“Deliberate deprivation” sounds depressing – but it’s actually liberating. One of the reasons kids (and adults!) end up feeling like they need more, more, more to be happy is because they get used to a specific level of consumption. More things don’t make us happy. We get used to the higher level of consumption quickly, and feel like that next thing will make us happy.
One way to help increase your happiness with what you already have is to deliberately deprive yourself of that item for some time. This works with both kids and adults. Find out more about how to use deliberate deprivation to increase appreciation here.
Economic Outpatient Care
“Economic outpatient care” is a concept I first read about in The Millionaire Next Door. It’s essentially the idea of paying for your kids once they’re grown, enabling them to live a lifestyle way outside their own means. It disables your kids, makes them dependent upon you, and can destroy your own financial future.
Instead of disabling our children, lets enable them to grow up with strong money values, and stand on their own two (financial) feet. Read more about avoiding economic outpatient care with your kids.
More Resources To Teach Kids Money Values
So how exactly do you teach your kids these lessons? My favorite way, honestly, is using ordinary everyday events to impart valuable financial lessons. Check out my Frugal Family Fun page for more stories about how we do this – I bet you’ll get a lot of ideas on how you can do the same thing with your own family.
For younger kids, I highly recommend watching Warren Buffett’s Secret Millionaires Club webisodes together and talking about them.
I’d also recommend reading this Arthur book about when Arthur wants to buy a new treat dispenser for his dog. It’s a great example for kids about not believing everything you see on TV. (note – the book link is an affiliate link. If you buy it I get a small commission at no cost to you – or you can always get it from the library).
If you haven’t already, be sure to swing by my comprehensive Kids and Money page. Don’t see an article or resource you’re looking for? Drop me a note at firstname.lastname@example.org to recommend future articles or request resources.
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