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3 Money Topics We Should Talk About With Our Children


Money is a big part of life.  As much as some of us may try to say it isn't, that money doesn't rule our lives, it does.  You either are trying to figure out how to get more or trying to figure out what to do with what you have, or most likely, both!

From a young age, when children start to get an allowance, birthday money or even just finding change on the street, they want to spend it.  They don't care how much they have, or even if they have enough, the second that glorious money hits their possession, they want to use it.  I'm not sure if its because it makes them feel older, being able to buy something by themselves, or just the adrenaline that they receive from getting a new item, but they want to spend it as quick as possible.  This is why it is so important to teach them at a young age the importance of saving money.


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50/30/20 rule - If you don't know what this is, look it up.  Basically it means that you use 50% of your money for essentials (rent/mortgage, food, gas, and utility bills), 20% goes into your savings, and 30% is for personal things (cell phone, new clothes, new gadgets, etc).

Obviously, your child does not need to pay for essentials, so you need to sit down with your child, and come up with their own plan.  Maybe, together, your child decides that they want to keep 50% for spending, 30% for their savings, and 20% to give to charity.  You're the parent, you know how to guide them in the right direction, but try to focus on saving first, and spending second.
I personally need to let my children make more decisions about this.  Right now, they save their money and give some to charity.  I don't let them spend their money on much, because I know most of it is crap that they want, and they have so many toys at home.  That being said.  Most of the time it's not that I just say no.  I'm usually talking them out of it.  More often than not I say:

"Do you really want to spend your money on that?  You'll probably use it a few days, and then get bored with it.  Wouldn't you rather save your spending money to get something big?" 

 This usually works, but they haven't gotten that "something big" item yet.

Related Article: How to be a Healthy Role Model

Short term and long term savings - Teach them the difference between these two.  It can be really hard for young children to understand long term savings.  My daughter, who is 9, is only now really starting to understand.  I asked her one day:

 "Are you going to want your own car when you can drive, or do you want to have to wait till Mommy and Daddy let you use ours?"

Of course she said she wants her own car so she can go places when she wants.  And then, to get some brownie points, she said so she can help drive her siblings around also.  So I told her that we may not be able to afford a car for her when she's that age, and if she had a good savings, she could get a nicer car.

Now while that's a long way away, there are aways bigger ticket items that she wants that we just won't pay for.  These are what she saves for that doesn't take her too long.  You want a new game for your game console?  Save for it.  You want a new toy for outside?  Save for it.  You want that adorable Justice shirt (which is way to expensive for my blood).  Save for it!

We all spend a lot of money on our kids, putting them in activities in order to enrich their development.   They know this.  When they complain that we never get them anything (ohhhhh just wait till they find out about Santa!), we'll come back with, "Okay, well to get that then we can't send you to that basketball camp you have your heart set on".  They go silent real quick.

So that being said, when she sees something she wants, she says she's going to save her money for it!


Let them start a small business - My oldest sees me with my business and her brain starts to turn.  She sees the fact that I can make something out of just yarn, and people pay me for it!  Something I love to do, and I get money from it.  So she starts to think.  She LOVES doing perler beads.  Usually, she just gives them out to her friends, because what is she going to do with a box full of all her creative productions?  One day, though, she really started thinking about it.  She asked if she could sell them at one of my craft fairs.  I told her I thought it was a great idea, but she had to start thinking like a business woman.  I asked her questions such as

Do you think people would want them just plain? 

What about adding keychains or magnets to them, so they become useful?

How much would you sell them for?

How many of each kind do you think you need?

You realize you need to use some of your money to buy the materials to make them right?

Then we got talking about the phrase 'you have to have money to make money', and I think I lost her.  LOL.  She is gun-ho about it though!  She has a shoe box to fill up, and she asks me to find examples of 8bit images of certain animals or characters on her iPod so she can make them.

Having your children start a small business is great for them.  Help them come up with the idea, then plan it out, and then help them execute it.  I say help, but if they are older, they can obviously do a lot of that by themselves.

Related Article: 7 Ways to Get Your Kids to do Their Chores

Sum up - I know money issues can be hard with young kids.  Knowing when they are old enough to understand is up to you.  You know your child best, and you know whether or not it's an appropriate time to start talking about it.  Like I said earlier, even I have a hard time with it.  I don't let my kids spend their "spending" money like I should.  They really need to take that responsibility, and maybe they will by that crap item.  But you know what?  They'll learn.  They'll figure out that they don't want to waste their money on something that won't last very long, or that they may end up losing interest in!


What do you let your kids spend their money on?  Are they required to save anything? Or do you let them get what they want, and learn that lesson on their own?  I'd love to hear in the comments below.

Comments

  1. Really awesome advice. I feel like too many parents neglect to teach their children how to take care of their money. Its such a valuable thing to teach your children. Great post xxx

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    1. Thanks. My husband and I definitely try to teach them about proper spending habits, even when they are real young!

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  2. I love this! We taught our children growing up because they will handle money in their life more than anything else. Really good info

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    1. It's so true! If they don't learn when they are younger, its going to be hard for them when they are older for sure.

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  3. You're so right! Whenever my daughter comes into money from her birthday or a holiday, it's as if it's burning a hole in her pocket! She needs to spend it right away. We are trying to teach her the value of money and how to save. Thanks for the tips.

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    1. It's a tough balance sometimes because people who give them the money want them to spend it on fun stuff. Us as parents though, want to teach them the value of saving it!

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  4. I hadn't heard of that first rule, but it sounds like something that I should start doing myself. Guess these aren't just for kids!

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    1. Honestly, my husband taught me that rule! It's such a good rule for everyone!

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  5. My first isn't born yet, but we've been starting to have conversations about how to have conversations with her about money. I don't want to overly burden her with feeling like she has to be responsible with every cent from the time she's a toddler, but do want her to be able to learn for herself how money only goes so far and every choice made means another choice that can no longer be made.

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    1. It's really a personal choice how you want to approach it, but I really think it's important to have at least a few ground rules. I mean, I don't talk about it with my 2 year old, but definitely do with my 5 and 9 year old.

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  6. I think it's great to teach your children how to be responsible with money from a young age! :)

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    1. I do too! Thank you so much for visiting.

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  7. I just wrote a post about teaching kids about money a few days ago! We have a play cash register and it's opened up a lot of conversation about money with my 3.5yo. I remember hearing about that system of teaching kids to save, give to charity and then keep some money to spend years ago (before kids) and I made a mental note that I wanted to do that method with my kids. We are just approaching that time with my oldest. Teaching money management is such a vital life skill. Great post!

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    1. Thank you! I agree, it's so important to at least start talking about it when they are younger, and implementing it as the get a little older.

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  8. I could even use this advice, and I'm not a kid! It is so important to instill financial knowledge in children. I know I didn't learn anything like that in school so it was entirely up to my parents to teach me those things. Great post!

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    1. It's definitely great advice for anyone of any age! Thanks for commenting!

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  9. Wow I wish my parents would have talked to me about money as a kid. This was the first time I've ever heard of 50/20/30 rule. And I love the idea of letting the kids start a business - work ethic and true life skills.

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    1. My husband is the one who told me about it, and it's a great rule to follow at any age! Thanks for visiting!

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  10. Great advice! Honestly, I think I know some adults that need this info too!

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  11. I have never heard of the first rule but I love it! My kids are grown now but I still talk to them about needless spending ;) - Cori @ Sweet Coralice

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    1. Smart Mama! No matter how old, our kids can continue to learn from us!

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  12. I love your advices. Being a mom of 2, I only give money when they need to buy anything. They don't spend much. Because I, myself, value money and spends on important things only.

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    1. I don't really give them money either, but we live far from family, so they tend to send checks so they can get what they want. That's when we have them put it aside and learn a little about saving.

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  13. Awesome advice! It is so important to teach our chidlren about money and how it works. We homeschool and our daughter who is 13 started her own business last november and it has been a wonderful way to teach her about $

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  14. Such a brill and important topic to discuss and teach kids too!! I think modern edu is missing this part - teaching children how to utilize financial funds and income. Crucial!!! We have been doing great saving up for the house. Missing being able to take a vacation at the moment but, priorities :)
    xox Nadia

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    1. I hear ya. We still haven't had a honeymoon! Our 12 year anniversary is tomorrow!!! LOL But, we can't see spending that much money that we don't have. It's so important to teach our kids that even though we want something really bad, it's not worth putting your financial future in jeopardy.

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  15. good and very ambitious tips, i never had such tips and advices when i was younger so having learnt of these now is good for the younger generation.

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    1. I completely agree! Thanks for commenting!

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  16. I adore this post. I think teaching our kids these lessons now at a young age will be a huge help in their own future!

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    1. Absolutely, we'r their first teachers, so let's teach them how to be financially independent when their older!

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  17. This is such great advice.

    Our boys are three and four months so we dont talk alot about money to them right now. We do say a few things to our three year old and I feel he has an understanding of this.

    We have started talking about how we will help them to understand money in the future. Starting a small business sounds like such a great idea. We are hoping that we can help our son to buy a home when he is 18. Its a big ask, saving etc, but we feel he will learn so much from it.

    Love all of the tips here! Thanks so much for sharing!

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    1. Yep, we recently started talking about it with our 5 year old as well. Our 9 year old has had more talks, but she's older. As long as you slowly introduce it, and continue talking about it as they grow, they should be pretty smart when it comes to money when they are off on their own.

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  18. It is important to start learning it early and teach children how to save because it will beneficial for them in their future.

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  19. This is great information. We do en envelope system where they have an envilope for spending, saving and giving. My kids would give all their money away if I let them. It works pretty well but we have to talk them through things sometimes.

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    1. That sounds like a good system too! Thanks for sharing .

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