We teach our children about many things in the short time that we have together. We show them how to tell time and how to tie their shoes. But what do we teach our children about money? Maybe you have heard the one about the little boy who overheard his parents say they can’t afford something. The boy says, “It’s okay mommy, just go to the bank and get some money out of the machine.” If only it were that easy.

Savings Account

One of the first things you should teach your child about money is the importance of saving. Open a savings account in their name and start giving them an allowance. Encourage your child to deposit money into the account so they can watch it grow. 

EGGSTACK RETIREMENT PLANNER

There are several lessons to be learned here. One is the time value of money. Your child will see how money earns interest in the bank. Another is self-discipline or delayed gratification. Instead of blowing their allowance on candy bars and comic books, your child can save to buy something they really want.

Children and Money

Children should learn the value of a dollar. The best way to teach them that is to pay them to do simple chores and tasks. Give your child a job in the yard or around the house, something he or she probably won’t enjoy. It will teach them the value of a dollar and about trading their time and effort for money.

Another valuable lesson is charity. Money isn’t meant to be hoarded, a portion of it should be shared with others. Encourage your child to place some of their allowance in the collection plate at your place of worship or in a Salvation Army bucket.

Our children need to know that money should not rule their lives. Teach your child the difference between money and the love of money. Money in itself is not evil, it’s the love of money that is the root of all evil. 

Budgeting

It used to be that one of the things we taught young people was how to balance a checkbook. With the advent of online banking, that is no longer a necessary skill. You can replace that lesson with one about budgeting. Teach your child the importance of living beneath their means and sticking to a budget. In How to Create a Budget, we go through the process step-by-step.

One of the benefits of budgeting is it forces you to establish priorities. A budget is a zero-sum game. When the allotment in one category is increased, it comes at the expense of another. Necessities such as housing, food, and transportation should always come first before lesser things like entertainment, dining out, and clothes.

The Last Word

Teaching your child about money might help prevent them from becoming a failure-to-launch burden. That can be the biggest impediment to your ability to retire. It is very difficult to save for retirement when you are shoveling money to an "emerging adult" (i.e., endless child) in their late 20s or 30s who refuses to work.

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