Teaching Kids about Money

raining moneyDid you buy a powerball ticket? I cannot wrap my brain around 929.9 million or however much money it is now. It’s such a ridiculous amount of money I can’t even conceive of what I would do with it. That feeling of confusion and overwhelm is how kids and teens feel amounts from $500. – $5,000. It’s hard for them to conceive it. They know money is important, some may want it, but they don’t really get how to deal with it or how to hold it in their brain in a way that makes sense.

Kids learn from concrete, tangible, emotional experiences. When we swipe our phone to buy a Starbucks coffee or swipe our Apple Watch to buy groceries, they have a hard time getting comfortable about this conceptual thing called money. Even writing a series of numbers on the signup form for baseball seems strange. With cash from the tooth fairy and gift cards as birthday gifts, today’s kids have more money than ever but are they learning about how to make it feel manageable? 

A secure relationship with money is balanced in ones ability to spend, earn, and manage it in healthy ways. We want our kids to have a healthy relationship with money so let’s take a look at the big picture so we’ll know where to help them (and ourselves!), improve. As you read these, see if you can place you, your kids, your parents, and partners in these categories. 

Spending – A secure, healthy spender feels good about their purchases. They know they have the money to pay for their item and they enjoy using it for this purpose.

An unhealthy spender can either dislike spending money because it brings up fears of lack or scarcity, or they spend money easily and unconsciously, not thinking about the money at all and not enjoying the purchase after the initial high.

Earning – A healthy, secure earner has confidence in their ability to make the money they need to, to be comfortable in their life.

An insecure earner does not believe they have the ability to earn the money they desire, or they have so much confidence in their earning ability that it becomes more important than everything else in their life, including their relationships with people and themselves.

Managing – A healthy money manager knows how much money is coming and going and can look at their bank accounts with ease and understanding. There is a basic comprehension of interest rates, credit ratings, and compounding interest and a resourcefulness to ask for help when needed.

An insecure money manager lives with a “head in the sand” approach, not looking or learning, or on the other extreme, may manage every penny to the micro level, missing out on the joy that spontaneity and trust can bring.

So if kids aren’t seeing us interact with money, or picking up on our insecurities, how can we help them get a clearer understanding of what money is and how it works?

1.) Talk to them about money from a positive and abundant attitude. Talk about the value of your home, how much your mortgage costs, show them the bill with the PG&E tier system, how much you spend on their sport,TV, groceries, etc. Remind them (and yourself) that we can have anything we want!  Money is about choices: we could buy new shoes or go out to dinner. Mom could work two jobs, but then we wouldn’t see her much. We could buy a new car or go to private school. We always have choices.

2.) Play games that teach about money. Whether it’s Lakeshore’s The Allowance Game or Cash Flow by Robert Kiyosaki of Rich Dad, Poor Dad fame. There are lots of board games and online games that help kids understand money.

3.  When we don’t have our hands on real money, symbols of it are the next best thing. Giant thermometers on the wall of the school show how much money has been donated and how much we still have to go to reach our goal. These help us make the invisible seem real. Create a paper thermometer on your wall to show how close you are to reaching your money goals or use one of the MANY apps out there for a friendly way to track how your money comes and goes. I like “Mint” for setting financial goals and “Spending Tracker” to manage expenses but there are many good ones out there. 

4. Stay old school. Use cash when shopping, play store with real money in the kitchen, exchange their gift cards for cash then take them to the store to spend. Use the envelope system to budget your discretionary spending Cash clipped to a chore chart gives a concrete symbol of what kids are working towards.  Kids learn about money by seeing it, touching it, talking about it, and playing with it.

5. Allow kids to have negative and positive experiences with money. Emotions are a great teacher and it’s important to let kids make their own mistakes. If they loan money and don’t get it back, they’ll never do that again. If they leave money laying around their house or hanging out of their pockets, and it disappears, oh well. Losing money is what teaches kids to value it. Have them create a list of things they want to buy or do. Wanting things that require money, teaches them to value it.