We all want our kids to learn good money habits that will carry them forward into adulthood. Ideally they’ll get the basics of saving, spending, donating and sticking to a budget.
Just one thing: how can we teach our kids about money when most of us fail to lead by example? Unlike past generations, we tend to be a nation of spenders, not savers.
Consider this recent study about parents, kids and money from T. Rowe Price. While 92 percent of 1,000 parents surveyed say they understand the importance of setting savings goals, only 43 percent actually do so themselves. Only half regularly set aside money to save and invest. In general, the study found parents regret not saving enough (43 percent) and being in too much debt (32 percent).
So, how do you avoid the “do as I say, not as I do” stance? Start with these three steps.
1. Let them learn by doing. Give them an allowance and let them make their own decisions of what to buy. If they chose to blow all their money on a toy or clothing item, and that item turns out to be a dud, they learn the consequence of having to wait until the next allowance.
2. Learn together. If your child has goals to save up for a particular item, set your own savings goals simultaneously. See how you both do after a certain timeframe.
3. Tell them some of your money mistakes growing up. Explain how you learned (or are still learning!) from certain missteps in your childhood. Here’s mine: I saved for weeks to buy a pair of designer jeans only to shrink them after the first washing. Soon after I began a love affair with vintage (read: cheaper) clothing.
Do you find it difficult to talk about money with your kids?
Deanne Gage has written about all matters financial since 1999. She writes, edits and strategizes out of her Toronto home that’s partially under construction. Besides money issues, she enjoys running fast, jazz music and drinking a quality glass of Merlot. Her two-year-old daughter is quite familiar with money: she borrows it from mom’s wallet for her toy cash register.