I was blessed to grow up in a home where my siblings and I were taught wise money habits (would you really expect anything else from Dave Ramsey’s family?). And even though I didn’t always love the lessons on saving and budgeting as a kid, that knowledge set me up for success as an adult.
Sadly, way too many kids today miss out on the value of financial education, and way too many adults still struggle with money basics. But the good news is, you can start teaching your kids about money today with these five simple tips.
1. Give them a job
It’s so important to teach your kids the value of hard work at an early age. Work is good for them and helps them develop so many important skills, like responsibility and teamwork. And it’s key for them to learn money isn’t free—you have to earn it.
So, instead of offering them an allowance for just existing, try paying them a commission for each chore they do around the house. If you really want to teach patience, you could give them their “paycheck” once a week or every other week, just like in the real world. This way, they’re still getting rewarded, but they’ve worked hard for it and learned about delayed gratification in the process. And of course, these jobs should be age-appropriate (we don’t need any 5-year-olds trying to iron their own clothes here).
2. Make giving a priority
Kids will learn a ton about handling money just by watching you. When you and your spouse make generosity a habit, your kids will too. Whether that’s tithing at church, giving money to the homeless community, or buying groceries for a neighbor who’s having a hard time, let your kids see—and even participate in—these acts of generosity. This will build character and a healthy attitude toward money that will stick with them into adulthood.
3. Show them how to save
An easy way to help your kids practice saving is by starting them on the envelope system. All you need is three envelopes labeled Give, Save and Spend. Every time they earn or are given money, have them divide it up and put part of it into their Give envelope first. Then part of it goes into their Save envelope, and the rest can go into their Spend envelope so they can use it to buy the things they want.
4. Invite them to your budget meeting
This one depends on what works for you and your family, but if your kids are a little bit older and able to understand what’s going on, think about letting them sit in on your monthly budget meeting with your spouse. It’s a great way for them to see how budgeting works and learn that everything they have (including food and electricity) comes with a price tag that you have to plan for in advance.
And if you and your spouse don’t currently have a regular budget meeting where you make time to plan out where every dollar of your income is going each month, there’s no shame here—it’s never too late to start! Budgeting really is the best way to take control of your money.
5. Let them make mistakes
Kids are kids, and that means they’re going to make mistakes. And sometimes, you just have to let them so they can learn from it. I’ll never forget the time I went to a theme park with my family when I was young and spent all my own money on one carnival game that I kept playing over and over, hoping to win (I lost every time). I begged my dad for more money so I could keep playing, but he kindly and firmly said, “Rachel, when the money’s gone, it’s gone.”
I didn’t love it at the time, but that taught me an important lesson about how things work in the real world. Your kids might make similar mistakes with money, but when you let them experience the consequences—within reason—they’ll learn and grow a lot more than if you fix everything for them.
I hope these tips help you set your kids up for long-term success with money. You’ve got this! For more tips on showing your kids the value of money and hard work, check out this article.
* Rachel Cruze is a two-time #1 national best-selling author, financial expert and host of The Rachel Cruze Show. She has appeared on Good Morning America, TODAY Show and Live! With Kelly & Ryan, among others. Since 2010, Rachel has served at Ramsey Solutions, where she teaches people to avoid debt, save money, budget and how to win with money at any stage in life. Follow Rachel on Twitter, Instagram, Facebook and YouTube or online at rachelcruze.com.
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