As babies, we’re brought into this world only knowing how to eat, sleep, and cry.
The way we think and feel about the world around us isn’t hardwired, and we are products of our environment, which means we are continuously learning life skills from the people around us and the things we experience. Overall, our skills often come from nurture, not nature, especially when it comes to money.
This means we can learn and develop healthy (or unhealthy) money habits at any age. Of course, the earlier, the better — and knowing how to impart age-appropriate money practices is critical.
Even as early as pre-school, we start to develop our belief system, and we carry these beliefs with us into adulthood. Molding a healthy financial mentality from a young age will set your children up for success in the long run. Here are some tips to prepare your kids for a healthy financial future.
Start the Conversation as Early as Possible
Belief systems and habits are foundationally formed in our earliest years.
By 3 years old, we can grasp basic money-related concepts, like counting and saving versus spending. By the age of 7, many of our subconscious thought patterns are developed. It’s not the math that matters, like budgeting, but the behaviors and decision-making processes around money that form the foundation of our habits.
Starting the conversation and conceptualization early on will prepare kids to form healthy habits early.
It Starts With You
Kids typically learn how to spend money, talk about it, and behave when making monetary decisions from their parents.
The absence of financial conversations can lead to bad financial habits and attitudes. The beauty of making an effort to instill healthy financial lessons in kids is that it holds you accountable for practicing healthy financial habits yourself, which ultimately supports your long-term goals.
It’s important to be intentional about what you teach, how you teach it, and when you introduce certain topics. Having your kids present when discussing budgeting, monthly earnings, saving, and planning — while keeping it light and fun — will help them to develop a positive attitude towards money.
Age-Appropriate Money Lessons
When teaching your kids about money, it’s crucial to tailor the lessons to their age. Here is a general framework that can help you to instill lessons in your children at any age.
Under 10 Years Old
Start with the basic concepts of spending versus saving.
At this young age, children can understand fundamental concepts and counting. Exercises like giving your kids a small allowance and letting them make buying decisions, like lunch at school or shopping at the store, will help them understand spending.
Later, introduce other choices, like the ability to save for something in the future and spend a certain amount today. This will instill practicing their counting skills and understanding that money has a limit.
Ages 10-14 (Middle School)
At this point, once they understand how to spend and save, you can teach them how to earn and give.
Exercises like providing monetary incentives for chores or work, like cutting the grass, shoveling snow, walking the dog, and more. This introduces the concept of earning money. Once they’ve earned the money, you can have further conversations about what they plan on spending it on, how to save for a future purchase, and even how they can give money to important causes.
Discussing the concepts of donating and volunteering can instill philanthropic practices at a young age.
Ages 15-18 (High School)
Perhaps now your kids have a part-time job or are consistently earning based on chores and other work. Introduce the concept of investing and the power of compounding, and continue to practice rounding out their overall financial skills to lead them to a life of healthy monetary habits at a young age.
Imparting good financial advice and lessons can be overwhelming at times, especially when trying to practice them consistently yourself. But it doesn’t have to be. Instead, follow these three steps:
1. Make It Easy
Keeping exercises like allowance or incentives simple and uncomplicated will allow them to understand and stick to them. Maybe you will adjust them over time and with age, but at least you will practice them consistently.
2. Make It an Everyday Practice
The act of regularly including your children in money decisions is an easy solution. Having the whole family involved in the monetary decision-making process can make it more fun, and everyone will benefit.
3. Let Them Fail
Mistakes are some of our greatest teachers. Starting early and keeping the mistakes small will allow you to coach them through, discuss what they learned, and teach them how to make more informed decisions in the future.
No matter what age your child is, it’s never too late to start. You have the opportunity to instill healthy financial habits that they will carry with them for the rest of their lives. At the same time, you’ll be consistently sharpening your own skills and practicing positive financial habits to set a good example.
TrueNorth Wealth Is Here to Help
At TrueNorth Wealth, our goal is to ensure you achieve yours and guide you through major life changes. We offer the best financial services in Utah and can help you explore your money habits, set your children up for financial success, and create a lasting legacy.
To get in touch with a trusted fiduciary in Boise, Idaho, or throughout Utah, contact TrueNorth Wealth today!