Beautifully Frugal: Important Things to Teach Children About Money
“Beautifully Frugal” is a monthly blog in which Alex Miller of KerberRose Wealth Management shares insight she gained during her family’s journey to financial wellness. In her own words, her family is: “A house full of girls living beautifully and frugally on a written budget."
Did you know by the time most children are seven years old, they can grasp the value of a dollar and their personal finance behaviors have already developed? According to a study done by the University of Cambridge, this has been proven to be true. Can you believe it - at the age of seven? So where are they learning this from? Rodney Adkin’s song “Watching You” is what comes to mind, and it couldn’t be more true. Our kids learn more from our behaviors than anything else. As such, this can be a tough topic to talk about, because we must look at ourselves in the mirror and scrutinize our own money habits.
Where do we start, and what are the most important things to teach our kids when it comes to money?
Money Is Not Infinite
Unless you are Bill Gates, your money most likely isn’t infinite. Teaching our kids the following concept is important: when you run out of money, it’s gone. This can be hard to do. For example, my family and I recently took our daughters to Disney World. Their grandma gave each of them $50 to spend; they thought they were rich! My youngest daughters, who are five, spent all their money less than five minutes after we walked into our first gift shop. Once they realized their money was gone and they couldn’t get anything else, it became a big ordeal. As much as my momma heart wanted to get them one more thing, I didn’t give in to their tears. I just reminded them they had spent all their money and now it’s gone. This is how money works once you have spent it all, and it’s important for children to internalize this fact. I hope one day they value this lesson, as hard as it was for them to learn it.
How to Save
This concept is even hard for us as adults, right? We are constantly looking for the next big thing, regardless if we can afford it or not. I’m not saying having things is bad - I want you to have nice things! I just don’t want those nice things to have you! Teaching our kids to save up for large purchases and paying cash not only instills discipline in their lives, they also get rewarded once they have accomplished it. Learning delayed gratification early-on helps our children succeed as they become adults and leave the nest.
How to Spend
Teaching our kids how to spend is equally as important as teaching them how to save. Remember my youngest daughters at Disney World and how they spent all their money in a flash? Meanwhile, my two oldest daughters were weighing the opportunity cost of every possible purchase. They almost didn’t spend their money the entire trip, because they knew they would have less of it once they did. This is the opposite extreme compared to my youngest daughters; we had to teach them while saving is good, you also need to be able to enjoy what you have. In summation, Cambridge University was onto something, because before this point, we hadn’t had in-depth money conversations with our kids.
How to Give
Teaching our children how to live their life with an open hand instead of a closed one teaches them gratitude, contentment, and thankfulness for all which has been given to them. Giving brings joy to our hearts and fuels our souls when we see the positive impact of giving in someone else’s life. Teaching our children to give can be done in different ways, apart from just money. The best way to teach our kids how to give is to model giving ourselves. This could be giving some of our resources to someone in need, a church, a charity, a local fundraiser or giving our time to help someone else. When we give back, our kids see the joy we have brought to someone else and how good it feels to help others, inspiring them to do the same.
Money Comes From Work
Money comes from work; it doesn’t get handed to us. Teaching our kids you must work to earn money is vital. When we give away our money to our children and don’t allow an opportunity for them to work, they are not learning a respectable work ethic, or learning the necessary skills needed to manage their financial life. I’m not saying we shouldn’t help our kids financially, yet like everything else in life, we must learn balance. We want our kids to make smaller financial mistakes while they are still under our roof, so we can help teach and guide them. We don’t want them making life altering financial mistakes once they leave our home, just because we didn’t give them the opportunity to learn while they were still with us.
Talk about Budgeting in Front of them
When you have a lot of little kids running around, it’s hard to have some alone time with your significant other to talk about your budget. My husband and I quickly realized if we didn’t start talking about the budget in front of our kids, we would never have the time to talk about it at all. Little did we realize, talking about it in front of them was showing our kids how to have a healthy and open conversation about money with your spouse. There are no money fights or tension between us as we work on our budget together, and our kids see this. Learning how to have a respectable, open conversation with your partner about money is just as important as navigating how to manage it properly for your family.
I believe every parent wants to set their kids up for success in every way possible. Why wouldn’t we want to provide our children with the best possible model? By teaching and modeling to children these six money lessons—how to save, spend and give; that money is a finite resource; that money is earned, not handed to us; and to have open and healthy conversations about money with your partner—you are priming your children for a life of financial success.
Alex is one of our financial wellness advocates on our Wealth Management team. She is a mom of four, and her passion is sharing her own personal finance journey from living paycheck to paycheck and drowning in debt to finding financial peace. Alex's unique experience has given her the ability to help families take control of their own personal finances - all while still enjoying what life has to offer.
Contact: alex.miller@kerberrose.com