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Most schools don’t teach financial literacy, so it’s up to parents to teach it at home. If this is something you’re struggling with yourself, we can help. Whatever your level of financial literacy, there are some dos and don’ts to keep in mind when helping your kids learn it.

Dos

Lead by example. Kids are like sponges and will absorb everything you do. They also have a keen eye for when someone says one thing and does another.

Teach saving, spending, and giving. These three concepts are the cornerstones of money management. An easy way to teach them to your kids is to set up three jars or envelopes and label them “Save,” “Spend,” “Give.” For every dollar they make from their allowance or other odd jobs, help them distribute it among all three jars.

Open a bank account. When the save jar is large enough, take them to the bank and help them open their own account. Depending on their age and bank policies, you may need to have your name on the account as well.

Teach expense tracking. It doesn’t have to be fancy. A simple handwritten list will do. But teaching them how to track their expenses now sets them up to create and manage a budget successfully later in life.

Talk about values. Spending on candy right now may feel good, but saving and buying something with more long-term enjoyment provides those same good feelings for a longer period of time. Help your child understand which one they need more and make decisions based on that.

Let them make mistakes. It hurts to watch them deal with the negative consequences, but those consequences are the best teacher. If you’ve talked the decision through with them and they still want to do it, let them. They’ll learn and do things differently the next time.

Teach prioritizing. The spend jar isn’t bottomless. If they want to buy something now, they may have to forego something else. This is good. Help them decide which thing they want is more important.

Plan for emergencies. Kids don’t think about emergencies. Mom and Dad deal with them. But part of financial literacy is having an emergency fund. Use real-life examples they can relate to and encourage them to set up their own emergency fund.

Teach other saving options. A bank account is a great start! When they’re a bit older, you may also want to teach about investing.

Make donations part of the plan. Find out what’s important to your child and work with them to research non-profits that are aligned with that. Then, show them how to use the “give” jar to make a difference.

Blonde child with piggy bank

Don’ts

Shield your kids from money discussions. While arguing in front of them may not be ideal, a healthy discussion about money matters in front of, or even involving your kids is beneficial. You can involve them in conversations about budgets, etc., as long as there is no fighting involved.

Fight about money. If you and your partner need to have a serious money chat that might be uncomfortable for the kids, do so when they’re either in bed or not around. This makes the healthy conversations feel safe for them and ensures you and your partner have the space you need.

Say, “we can’t afford it.” This statement makes money feel stressful and scary. Instead, when there’s something that doesn’t fit in the budget, use this as an opportunity to have a conversation about need vs. want

Avoid financial responsibilities. Your kids will see this and think it’s okay. While it can be tempting to duck calls or try to skip out on payments, it’s not a habit you want to pass along. Take responsibility and let them see you standing proud.

Place blame. While going on a tirade about the lights being on or the heat being up too high may feel good at the moment, it doesn’t teach anything. Instead, include your kids in a conversation about budgeting and how they can be part of your team in keeping to the budget.

Make it a competition. Some people are naturally more competitive than others. That’s okay, but you want to avoid sending the message that their worth is only based on money. If one child saves more and one spends, but they’re all using the three jars and living to their own budgets, they’re all successful and should be praised.

Make debt okay. Debt is and should be a little uncomfortable. Let your kids see you paying back your credit card bills. If you allow them to borrow money from you, be sure it’s paid back in a timely fashion. And say no if something they want isn’t in the budget.

Equate money with happiness. While money is necessary for certain comforts, your family’s happiness is based on more than that. Be sure your kids know that you can be happy and enjoy each other’s company without spending a cent.

What was your experience learning financial literacy growing up? How will you do it differently with your kids?