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How many of us look back on our childhood and wish we would’ve been taught more about money? A lot of people graduate from college without any idea how to manage their money or balance their bank account. Maybe you were one of them.
Now that you’ve learned more about managing your money right, you want to help your kids not make the same mistakes. So how do you change your family tree and teach your kids about money? It all depends on their ages.
1. Use a clear jar to save. The piggy bank is a great idea, but it doesn’t give kids any visual. When you use a clear jar, they see the money growing. Yesterday, they had a dollar bill and five dimes. Today, they have a dollar bill, five dimes and a quarter! Talk through this with them and make a big deal about it!
2. Set an example. Little eyes are watching you. If you’re slapping down plastic every time you go out to dinner or to the grocery store, they will eventually notice. If, at the end of every month, you and your spouse are arguing about money, they’ll notice. Set a healthy example for them, and they’ll be much more likely to follow it when they get older.
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3. Show them that stuff costs money. You’ve got to do more than just say, “That pack of toy cars costs $5, son.” Help them grab a few dollars out of the jar, take it with them to the store, and physically hand the money to the cashier. This simple action will do more than just a five-minute lecture.
4. Show opportunity cost. That’s just another way of saying, “If you buy this video game, then you won’t have the money to buy that pair of shoes.” At this age, your kids should be able to weigh decisions and realize that each decision has a consequence.
5. Give commissions, not allowances. Don’t just give your kids money for breathing. Pay them commissions based on chores they do around the house like taking out the trash, cleaning their room, or mowing the grass. This will help them understand that money is earned—it’s not just given to them.
6. Stress the importance of giving. Once they start making a little money, be sure you teach them about giving. They can pick a church, a charity or even someone they know who needs a little help. Eventually, they’ll see how giving doesn’t just affect the people they give to, it affects the giver as well.
7. Give them the responsibility of a bank account. By the time your kid is a teenager, you should be able to set them up with a simple bank account if you’ve been doing some of the above all along. This takes money management to the next level, and it will prepare them for (hopefully) managing a much heftier account balance when they get older.
8. “Help” them find a job. Teenagers have plenty of free time—fall break, summer break, winter break, spring break. If your teen needs money (and what teen doesn’t need money?), then help them find a job. Who knew that working was a great way to make money?
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9. Teach them the danger of credit cards. As soon as your kid turns 18, they will get hounded by credit card salesmen—especially once they’re in college. If you haven’t taught them why debt is a bad idea, they’ll become another credit card victim.
Remember, depending on your child’s development, you might start teaching some of these principles earlier or later.
Related: How to Talk to Your Kids About Money
It’s going to take an investment of time on your part, and it won’t always be easy, but if you want your children to understand how to successfully manage their money when they get older, following these guidelines will be completely worth it.
If you don’t teach your kids how to manage money, somebody else will. And that’s not a risk you want to take.
To help you have the tools and knowledge to guide your teens with all things money, Dave Ramsey and his daughter Rachel Cruze created Smart Money Smart Kids class membership, a six-week home study program based on the #1 best seller of the same title. In addition to saving, you can learn more about teaching your kids to work hard, spend wisely, and give generously—all with a spirit of contentment that will transform their lives.