Learning to be responsible financially and being able to understand and appreciate the value of money and having to save and work for the money is an important part of the children’s upbringing and education. It is the responsibility of the parents to ensure that the children learn these vital skills in a good way. If you handle finances and money in the wrong way when the children are small, there is a great risk that they will be too spoiled and that they will have a hard time understanding the hard work that underpins a good economy.
The school takes no responsibility for personal finance
This week it was the premiere on TV for a new series called Young and spoiled, where a bunch of young people who take money for granted will live together, work and manage their own finances. Probably for the first time ever when they previously had everything served on a silver platter. The series is entertaining in a way as it is fun to see immensely spoiled and rather stupid young people trying to cope with things that most ordinary people see as simple and obvious (eg cooking, cleaning, working for their money, etc.).
At the same time, it is also quite sad as it clearly shows that there are many people who seem to have no idea at all about finances, money and what it takes to manage their own personal finances and their lives. These are people who have been served everything and been looked after all their lives and for this reason believe that this is how it works – that money grows on trees and that they do not have to work or take responsibility.
Unfortunately, it is probably not uncommon for young people not to learn enough about managing money, taking their own responsibility or setting a budget and managing within it. Private economics is not a subject in school, which is a pity as it is something that is very important to learn. We all learn some things in school that we will almost never have any use for in everyday life but finances and managing money is something that everyone benefits from and therefore something that should be taught in school.
It would be logical to have a subject in school where you could learn all these basic things such as making a budget, setting up a savings, understanding bills and paying them, how loans and credits affect one’s finances and maybe even communication with one’s partner on financial matters. All such things are of great use in life and since the school should function in preparation, it would not be foolish if you could also get some such knowledge and not just theoretical subjects such as history and geography.
Just because you would like something to be in a certain way does not mean that it is. In the future, finances and money may become a subject in school, but until then, it is entirely the job of parents to teach children to understand personal finances and to manage money. It is the parents who have to give the children all the important tools that they then bring into adulthood so that they can manage their own finances in a sensible way.
Give the children a good foundation to stand on from the start
When you are a child, you have a fairly easy time to learn and absorb things. If one grows up during one’s upbringing, one can learn to take care of one’s own money, save money for what one wants to buy, make a budget and the like, it will often then hang up in adult life. What a parent must do is two-fold.
One part is about actively teaching children about money’s value, savings and such things. The second part is about how you treat them yourself and how you relate to money yourself, since you can easily influence them through their own behavior. Children simply take after their parents.
Actively teaching things about finance is important simply because it is good to know such things and if you teach the children how to manage money, why it is important to save, how to make a budget and how to keep it, etc. that knowledge to keep up with as the children grow older. But it is not only important to teach good things but also to treat the children in a way that promotes responsibility, hard work and appreciation, etc.
The latter is very closely linked to how you act as a parent yourself. Here it is about education and that the children do not get used to the wrong things. It is easy to want to treat your children the best and give them what they want, but you have to be careful to spoil them excessively. In this way, it is easy to create a feeling that you can get everything for free, without making any effort and without taking any responsibility. Unfortunately, through such behavior one can “teach” the children completely wrong values without even saying anything to them.
To give the children a good foundation for the future, one should both sit down with them and go through important concepts in personal finance and explain them and why they are important while also setting a good example and nurturing them in a way that they learn taking responsibility and the value of things in everyday life.
Great way to teach kids to become financially responsible
There are many ways to do this and here I will take some examples of things that can help the children to get themselves into a good thinking pattern.
Monthly / weekly allowance
Give the children their own monthly money and go through what they themselves are responsible for buying for this money. You can decide for yourself how much the children themselves are responsible for – clothes, sweets, lunch, etc. If you feel that your child is good at taking responsibility, you can give a bigger money and put on more things that the money will do.
You can advantageously place some demands on the children in exchange for the money they receive. For example, they should clean their room, do their homework properly, pick in a dishwasher or help with different types of chores. This means that you realize that the money does not come completely free of charge but that you have to do something yourself to get it. If you do not do your job, it will have consequences in the form of deducted monthly money, etc.
It is important not to give too much money in monthly or weekly money. It should be a reasonable sum that is sufficient for what is normally needed in a normal month or week. It must not be so much that the child can buy everything it wants completely free because then it does not require you to make any choices and you are not forced to save money or stumble if you want something special. These things are important in order to learn the value of money and the importance of saving and thinking through your purchases.
It is also important that you do not give in and give the children more money if they run out of money or if they want you to buy things that are on their own list. You have to learn to manage with the money and when they are finished they are – then you can not get the things you want anymore. If you give and buy these things to the children when their own money is over, the risk is that the children will not learn to be frugal or to think through their purchases.
Bring the kids when you shop
It is important that the children understand that you have to buy such things as food, etc. with real money and that everything costs money. If you bring them to the store early, you can also teach them at an early age that things cost. They can then also see how much different things such as milk, eggs, cereals, sweets and other things actually cost. Especially the things that the children themselves want and usually chatter about.
In this way, you can teach children the value of money and make them realize that they cannot just demand to get things. You can, with a little luck, also teach them to make a food budget and to plan their actions, etc. These are very good things to be able to do when you get older as there is a big difference between shopping for food in a planned and smart way and just shopping for what you need as well.
Let the children participate in planning holidays and the like
This is a bit the same as taking them to trade at a slightly higher level. For example, if you are going on holiday, it is safe to assume that the children have thoughts and requirements on destinations, hotels and such things. You can then involve them in the process and decision. You can start by explaining to them how much it can cost in total for the trip and hotel itself (food money and such can be kept out).
They can then learn about having a budget and adapting to it. They can help you find destinations and hotels they want to go to and that are also within the limits of the budget you have set up. With a little luck, the children find it fun to be involved and in this way it becomes a positive experience to make a budget and to find good alternatives within this budget.
In addition to teaching them that they have to adapt to how much money is available and the importance of a budget, etc., you can also get them involved in the process itself and then maybe later they will enjoy the trip even more. It doesn’t have to be just a trip, but it can be something like the hunt for a new car, etc. It is most about getting the children interested in actively working towards set goals and at the same time teaching them the value of money and what restrictions there are.
Such a simple thing as playing business, when the children are small, can do pretty much to teach them about money and such. You can start at an early age to bring in different games where money is involved and in this way you can also teach them early on that everything has a value and that you cannot buy for more than the money you actually have.
It can also work to play Monopoly and the like, although one must then also realize that the game differs a lot from reality and this is something that one can advantageously explain, so that the child understands the difference between play and reality.
Give kids a chance to save for something
Saving money to be able to afford to buy something you really want is a very good method of raising your eyes for frugality, the importance of saving money, setting up a budget and many other such things. It is often heard that children / young people who have succeeded in saving together something they really want feel a great pride and a feeling of having succeeded in doing something really good.
You should not underestimate the feeling of having managed to save / work together money into something that you really want. It creates a feeling that you have been good and managed to achieve your goals through hard work and / or through purposeful. So if you have the chance to create a situation where you can let your child save for something that they really want, just drive on. Encourage and help, but do not give a lot of extra money to the savings pot besides if the child has earned the extra money by doing something good, working or helping, etc.).
The important thing is that you do not let your child be too spoiled and without appreciation for money’s worth or control of how to manage their finances. The program Young and spoiled on the 3rd shows how you do not want the children to be, so if you want to be discouraged you can check it out on Tuesdays.