Key Takeaways
- Children learn a lot about how to handle money based on how their parents handle money, and from the ages of 7 to 11 is when they are most impressionable.
- There are little things you can do to teach your children good basic money habits, like getting them a savvy pig to learn about saving, spending, investing, and donating.
- Good money habits aren’t taught in school, so it’s a great idea to put a program in place for your children, so they can get a good foundation to build upon as they grow older.
When you finally have that first bundle of joy, you realize it’s not always quite so joyful after you have sleep deprivation and this new child running your life! But there’s a lot of things that come with having a child. And believe it or not, how you handle money around your child matters.
There are a lot of impressions made on your child based on how you do things, and how you handle money is one of them. A recent report from a US News article talked about that impression primarily forming between the ages of 7 to 11. For example, let’s say you are very frugal, your child could end up being the same, or they could be the exact opposite and end up overspending. It just depends on how you as parents treat money.
I was very conscious of this when I had my own children, and I tested some of this out when they were very young. Based on articles I’d read and experiences I’d had with my own clients, I tried to put things in place structurally that would help them build good money habits. So far, it seems to have worked out, as my kids are on their own with their own families and doing well, but I tried to ensure they had a solid foundation in terms of basic money habits.
So, what can you do with your kids to teach them good money habits? You can do something like get them a savvy pig. You can buy one on the internet, but it’s basically a restructured piggy bank that is separated in to the four main areas of what you do with money: save, spend, invest, and give away (charity). You start them off very simply by giving them physical money to put in to one of the four slots on their little savvy pig based on their goals and teaching them what each slot means.
This simple exercise can help you teach your kids things like instant versus delayed gratification (spend now to get a smaller toy, or take the time to save up enough money for an even bigger one), saving money for a big goal (maybe a summer camp they want to attend), and other basic foundations of good money habits that you may not have learned until you got to college, or maybe you learned much later.
You might be paying for some of your mistakes right now, and that’s not a knock on you, or even your own parents. Most parents don’t know how to teach their kids about money, because it’s not something that’s generally taught in school. So the lessons your kids learn come from the impressions you make on them about money and how to handle it.
If you really want to be proactive about helping your children build good money habits, especially at the impressionable ages between 7 and 11, put a program in place that goes over the basics. It will help shape a solid foundation for them to build upon as they grow older and have to make the big money decisions you’ve had to make, like getting student loans for college or buying a house. What they choose to do as they grow older is up to them, but at least you’ve given them some solid money habits that will hopefully help give them a leg up.
Until next time, enjoy!
Gary