Smart money habits are essential for long-term financial success. We all know what our parents taught us, and the hard lessons we learned when we didn’t listen. Not to mention the habits we formed from life’s unexpected events. So, when it comes time to teach money lessons to the children in our lives, it can get overwhelming. But it doesn’t have to be!
With Hello, passing on your financial wisdom isn’t a game of Operation — it’s easier than making pizza in an Easy-Bake Oven! In this guide, we share all our tips and tricks to help you start smart money habits early. Let’s get started!
Save more than you earn
One of the most important rules for financial success, regardless of age, is to save more than you earn.
Teach your kids to invest their money into three categories: spend, save, and gift. You can use play money and coins — like we did with Monopoly money growing up — to help them learn before they get the real deal.
Wants vs Needs
What is a want and what is a need — this is the age-old struggle. Teaching kids this distinction early on can help them avoid costly mistakes later in life. We talk more about needs vs wants in our Budgeting With a Smile article, but here are the key differences:
Needs are the things you can’t survive without, and the things you should spend your money on first. These include, but arent not limited to:
- Shelter
- Water
- Food
Wants add extra sunshine to your life, but aren’t necessary to your survival, such as:
- Your favorite streaming service
- The latest iPhone
- A new outfit or pair of shoes
A great way to drive this point home is to go through your weekly grocery list with your kids. Point out the prices of certain items, why you buy one brand versus the other, and answer any questions they may have. This will help them understand that money is a tool, not just a piece of paper.
If you have older children, consider lending them money for a big purchase. Buy them the latest phone model or a new pair of shoes and set up a payment plan with them, ensuring they pay you back in small increments (plus interest). In this scenario, you’re “playing” the bank, and teaching them that borrowing money isn’t free.
Set a savings goal
Whether it’s for the big purchase mentioned above or for college funds, teaching kids to set a savings goal (and how to reach it) is paramount to their financial success. Hello’s Youth Savings Account is a great place to start building their financial literacy and money management skills.
Plus, make sure to talk to your kids about your financial goals and how you’re putting them in motion. If you have a Money Market account or invest in CDs or IRAs, consider showing them your savings goals. You never know what might help motivate them!
Be open to questions
Remember, kids are naturally curious — they’re going to have tons of questions! Don’t shy away from the conversation, and try to be as open and honest as possible. We all know how stressful it can be to talk about money as an adult; by talking openly about money when kids are young, you can help normalize these conversations.
Quick weekly money recaps are a great way to make this a habit. (We’re talking no more than 15 minutes!) Consider reviewing last week's spending, account balances, and your weekly grocery budget. Don’t forget to discuss expected expenses, like upcoming bills, as well as any unexpected expenses that may arise, like car repairs.
Let them make mistakes
Your gut reaction might tell you to shield your kids from making money mistakes, but try to remember how you learned your hardest financial lessons. Sometimes it takes a mistake to let the lesson sink in. By teaching them all you can about money, you’re helping minimize the risk of major financial mistakes, but they should still have room to learn.
So, next time a payment is due or a check bounces, don’t jump in to save them. Let them figure it out and make mistakes on their financial journey!
Talking money isn’t always sunny, but with Hello, teaching your kids how to manage their money can be! If you have any questions about financial success — for them or for you — feel free to reach out to our team.
.jpg)