How to start Teaching your Kid about Money
There is no need to start having your 3 year old write out income statements, but there are a lot of concepts and behaviors that can be learned from a 3 year old that will help them with their financial management in years to come. As discussed in this analysis done by Dr. David Whitebread and Dr. Sue Bingham, concepts such as giving and receiving, understanding wants vs. needs, and the ability to plan and delay gratification are fundamental concepts that can and SHOULD be taught.
Giving and Receiving
This can be taught during shopping trips with the kids (yes those chaotic ones). When you get to the register to pay you can emphasize to your child that if you want to buy all the things you picked out then you need to pay for it. Somebody put their time in to make that ball and you need to pay them for their effort. This may seem very simplistic but kids don’t start off understanding the concept of having to pay for things. Ever known of a kid to shoplift? I actually was that kid at 3 years old. Luckily my mom threatened me that I’d go to jail and made me walk back to the store and return it.
Wants vs. Needs
Ever walk through a Target with your child? Do everything in your power to avoid the toy section? Completely understand. However, if before you go to the store you re-enforce to your young one that you are going there for a specific NEED and that’s it, you can use a fun section to re-enforce. Maybe even your own ‘fun’ target section. That would be the home décor for me. Now go into that section and point out something you really want but today is not the day to buy it because you came for that specific NEED. Then grab your need and then showcase the giving and receiving at the register.
Plan and Delay Gratification
I would consider this one of the most important concepts of creating a life you want. Teaching this concept to kids not only helps in making good financial decision but life decisions in general. This starts the teaching of making a plan for what you want, self discipline, execution and the return of delaying your gratification..
Ever hear about the Marshmallow test? A famous test on self control and delayed gratification. 4 year olds left with a marshmallow in front of them are told if they don’t eat it and wait 15 minutes they will get another marshmallow. [Linking here a similar video for entertainment, it really is entertaining to see how kids differ]. Although entertaining, the results are important, this displays a critical characteristic about how your child will or will not delay gratification.
These our simple ways to start that every parent can implement. We CAN teach young kids about business and finance and we NEED to.
