Do children still get piggy banks anymore? My piggy bank was pink, and my mom got it at her baby shower while she was pregnant with me. I think I still have it packed away in my sentimental keepsake box on the top shelf of my closet.
Saving your money in a piggy bank started over 600 years ago when our ancestors would keep their coins in clay pots in their houses. There were no banks at that time, so they had to develop a way to keep their money safe. The habit of counting money and taking it out of the clay pot or “piggy bank” is universal when it comes to money.
Today’s children are watching and learning about money just as they have been for generations. It just looks like more swiping, scrolling, and tapping to submit.
We Don’t Talk About Money
Did you know that by simply talking openly about money with your children, you can help them have a healthy relationship with money as they grow and become independent adults?
Most people were not taught about money by their parents. For generations, money conversation has been taboo. Yet, teaching your children about the fundamentals of money is more necessary than ever. Unlike generations before, we will not have pensions or social security that we can count on, so it will be up to individuals to save for retirement to have financial security.
Developing Healthy Money Habits for Your Family
It has become harder to develop healthy habits with money because we don’t have cash on hand as our parents did. With payment methods such as cards and pay apps, the idea of “managing money” is an abstract subject. So, what can you do with this generation to help them have financial success?
Talk About Money
Make money conversations a regular topic in your home.
Children as young as four can understand the basics of money. They are constantly watching, so they quickly figure out an exchange of goods associated with cash or a card swipe. Begin to teach them the basics like counting money and buying items at the grocery store.
As children get older, talk to them about what your spending plan looks like in your home. Spend time as a family gathering around talking about needs and wants as it relates to money coming in and out of the household.
Create money goals as a family.
Is there a vacation you’d like to take? Do you need a new TV or computer in your home? Teach children how to set money goals and the steps to reach financial goals. There are ways to make it super age-appropriate and it can be a fun project for your family. The key is to do it often so it becomes a regular habit and part of your family culture.
Pay attention to your words.
Having a positive money language in your home is critical for cultivating healthy money habits. When children hear phrases like, “We can’t afford that,” “We don’t make as much money as they do,” or “Rich people are so greedy,” we inadvertently send money messages to children that have the power to shape their money beliefs at a very early age.
Instead, you will want to use phrases like, “That sounds fun, but it’s not in our spending plan this month. Perhaps we can work that in next month.” Depending on what they are asking for, you could also say, “This is something you should put on your birthday list this year.”
In my private financial coaching practice, I work with couples who are taking control of their money, and we spend a great deal of time unlearning negative money dialogues that started when they were under ten years old. Being aware of your association with money can help you determine if you should work on this.
Teach Your Children About Money Using an Allowance
To give an allowance, or not give an allowance…that is the question (queue my best Shakespearian accent)! Allowance is an excellent way to teach children the mechanics of money. Here are the four basic functions of money:
- Money is earned.
- Money is spent.
- Money is saved.
- Money is given/donated.
These fundamental principles can be developed and expanded over time as your children mature. If you use these principles as a framework, you can ensure that you instill healthy money habits. You can go deeper on each topic. Eventually, once you have teens and young adults, showing them how to invest what they’ve saved allows them to see how saving starts the cycle over again as their money grows and interest is earned.
Develop Your Own Financial Education
What if you think that you don’t know enough about money to pass along good money habits to your children?
In the early days of teaching money, there is not much you need to know to start creating a basic understanding of money. As children get older, parents must model good financial decision-making skills.
Here’s what you can do to help you get better with your personal finances:
- Create a monthly spending plan.
- Set long-term and short-term financial goals.
- Have healthy spending boundaries, like living on less than you make.
- Have regular conversations with your partner about money.
- Read books and listen to podcasts about money.
- Payoff high-interest debt.
- Look for ways to increase income.
- Get help from a professional financial coach if you need help managing your money or specific financial advice.
It’s Up to You
Unfortunately, financial literacy is not a subject often taught in school. Creating money habits and teaching money in your home is extremely important. But here’s the good news, it is never too late to start. Just start today!