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Like so many other things in life—your work ethic or your attitude towards nutrition and exercise—your money mindset, or your beliefs and feelings about money, is established in your formative years.
But here’s the harsh reality: In the United States, we’re largely failing our children. For the most part, basic finance has been absent from school curriculums. According to Standard & Poor’s Global Financial Literacy Survey, globally, the country ranks 14th in the world for basic financial skills, with only 57 percent of American adults considered financially literate. Australia, Canada, Denmark, Finland, Germany, Israel, the Netherlands, New Zealand, Norway, Sweden, and the United Kingdom all have higher financial literacy rates.
As a result, most people are intimidated by their finances and shy away from having necessary conversations about money, says The Money Date Box founder Kathy Entwistle. But, as a parent, you have the power to change that narrative for your child. And the solution isn’t all that complicated—you just have to carve out the time to talk to your kids about money, so they’ll grow up informed, confident, in control, and equipped to make sound financial moves right from the start.
Here, are expert-backed strategies to help you get started:
No, we’re not suggesting you sit down and give your child daily lectures about money. Instead, use your everyday activities as learning opportunities. Once your child is old enough to safely handle money—typically late toddlerhood—introduce them to coins, cash, and credit cards by letting them examine the currency in your wallet. And, as they get a little bit older, you can even let them count out the change when paying for something at the store. It’s a great way for them to see and experience how money works. Ove time, your child will gain a better understanding of the value of items, plus how to begin budgeting for the things they need and want.
But don’t treat it as a handout. If you consistently give your kids money, they aren’t learning the value of hard work. Instead, try narrowing in on tasks your child can help you complete around the house—yard work, taking out the garbage, emptying the dishwasher, or folding laundry, for example. Then, set a “rate” for each task. Keep track of what your child completes throughout the week, then consider their allowance their earnings.
Another great way to establish good habits right from the start? Open a joint savings account with your child. (When your child turns 18, they can fully take over the account.) This way, they can deposit some of their hard-earned money into an account that they can watch grow over the years. This isn’t just a way to build an emergency fund or save for a car or college, though—it actively teaches your child that money isn’t just for spending.
Learning the ins and outs of spending and saving are important core concepts, but so is philanthropy. Teach your kids this important monetary skill by encouraging them to give a portion of their earnings to charity. Let your child choose the charity, and if possible, make it something tangible. For example, use the funds dedicated to giving to grocery shop and drop items at a local food pantry or homeless shelter.
While it’s important your children understand that private money matters remain, well, private, having candid conversations about your household budget in front of them is a great way for them to learn the ins and outs of managing personal finances. If you’re budgeting for a family vacation, for example, you could let your child sit in on the conversation, so they see how you prioritize and discuss big, important purchases in a healthy way.
There are tons of books out there to help teach your kids about money, so why not take a trip to your local library to pick out a few together? If you’re having trouble winning your child’s interest, you could also try YouTube, which has a surprisingly vast selection of channels devoted to teaching kids about money.
Of course, you can also hold a family game night. Games like LIFE and Monopoly get kids handling “money,” plus gives them the opportunity to practice budgeting and managing money in a smart way.
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