Though a few dollars here and there might not add up to much today, raising financially irresponsible kids could cost you and them a lot more down the line. Whether it’s grown kids who won’t leave the nest, or ask to borrow large sums of money when they can’t pay rent, or wind up with debt you end up helping them pay off, there’s a high price tag for kids that don’t learn financial skills early. The flip side, of course, is that you have the opportunity to affect future financial behaviors by teaching your kids healthy money habits while they’re still young.
Even if you do your best to teach and model healthy money behaviors, you don’t have total control over what your kids learn in the long-term, though. They’re affected by other factors including social pressures from friends, the habits of other adults in their lives, what they learn in school, and family financial issues beyond your control. What signs should you watch out for to make sure your kids stay on track?
Here are the signs... and what to do about them:
Their piggy bank is just for decoration.
Young kids may not be working with large sums of money, but if they never even drop a dime into their piggy bank, that’s a strong sign they’re not learning the importance of saving. This could be a good time to talk about the difference between everyday spending, short-term savings goals, and long-term goals. Explain that spending money immediately after earning or receiving it eliminates the possibility of buying something bigger down the line. Delayed gratification is hard for kids, so try starting with short-term goals—something that can be achieved in weeks rather than many months.
They’re deaf to the word “no.”
If your kids grow up hearing yes, yes, yes, they’re not going to learn how to cope with the inevitable no’s that come with growing up. Learning how to handle hearing “no” will help them down the line when they have to discipline themselves. How are they supposed to stick with a budget—essentially, tell themselves “no” to potential extraneous purchases—if you’ve never taught them how to cope? Even if you end up saying yes, you don’t have to say yes immediately, or fulfill the request on the spot. An impatient kid may grow into an adult that spends recklessly.
They’ve gotta have that “in” thing to be cool.
It’s one thing to be obsessed with the latest Disney movie , but that doesn’t necessarily mean spending money related to it. If your child is trying to follow trends with their (or more likely, your) wallet, try explaining to them that they can love Moana without owning every piece of Moana-branded merchandise. Instead of showing their fan-status by spending money, you can draw pictures of their favorite characters, sing songs from the movies, or just have a movie marathon!
They spend money on things just because their friends do.
This one is so important, because the cost of trying to keep up with friends’ spending habits will skyrocket long-term. Buying the same cool sneakers as their BFF is a lot cheaper than some of the adult equivalents: buying the same sports car, or the same size house, or taking the same fancy vacation. If your kid asks for something you know they only want because a friend has it, try asking them that all-important question: why do you want that? Then, explain that we should spend money on things we actually love, not just things we think will make us cool or things our friends have.
They have to have the full set.
Whether it’s LEGO sets, video games, or McDonald’s Happy Meal Toys, kids love collecting. Even cheaper items add up, though. Dozens of semi-precious stones or plastic figurines later, you’ll be wondering how many massages or bottles of wine you could’ve paid for with the same cash. Try getting them focus on choosing their absolute favorites of the collection. If they’re really nagging you to buy every last one, try using this as a lesson in delayed gratification. Schedule out how long it would take to complete the set if they could only use birthday or holiday gifts—chances are, they’ll lose interest in that particular item before all that time has passed.
They’re constantly emptying your wallet—even after you give them their allowance.
Borrowing a dollar out of your wallet may seem harmless (even if it’s pretty annoying), but if that behavior lasts into adulthood, it can lead to irresponsible debt. You probably don’t charge your child interest on borrowed money, but on the other hand, you don’t want to be an enabler. Charging interest could be a powerful lesson in the tradeoffs of using borrowed, rather than earned, money. Set up a system: for every day they go without paying you back, you’ll add a nickel to how much they owe.
They think that your little plastic card is magic.
Though making your child work for an allowance may not be the best choice for your family, there are other ways of teaching worth. If they want to purchase a big ticket item, set up a plan for how they might earn enough money by doing extra chores around the house or organizing a lemonade stand. Or, when they ask, explain that in order to get this one item, they’ll have to make a sacrifice or wait a while—there’s always a birthday or holiday coming up.
They hate sharing.
Teaching kids to save and budget is important, but so is raising conscientious, caring kids. If they’re never inclined to share with friends—whether that’s money, toys, or a helping hand—they probably won’t go on to donate to charity when they have the funds. Sit them down for a talk about why sharing is important. Depending on their age and access to cash, tie in how charity is like sharing on a bigger scale. No matter their age, you can always ask them to “help” you pick out an organization to make a donation of your own. Or, arrange a time to volunteer somewhere that they help choose—getting them to feel they “own” part of the experience is just as important as doing the actual donating or volunteering.
Whether or not your kids show any of these signs, it’s never too early (or too late!) to start teaching them the basics of money. Start out with real-life decisions that affect them personally, and they’ll build healthy habits in no time.