Many parents think that discussing money issues with children is not okay. However, I completely disagree. Now, let me clarify that statement first. If you are having severe money difficulties, or you are going through something that might cause your child extreme worry or anxiety (perhaps having a house foreclosed on, or a car repossessed), it is best not to discuss this with a child. They will not completely understand how big all this is, and they will undergo an extreme amount of worry and fear, wondering when things will start being taken away from them.
However, in the same token, simply being up front about the fact that you are on a budget, what a budget entails, and in order to stray from your budget, another financial area will suffer, are really all important concepts for children to learn early on. I started with my son when he was five.
I was a single parent when my son was five (now twelve) and my daughter was two (now almost nine). From the beginning, I was always honest about why I didn’t purchase all the toys and other stuff that they wanted, or snacks and junk foods (besides being unhealthy which I am quite verbal about too). I have always explained to them that I don’t have the money for this or that right now. That perhaps they could save up for it if they really want it. I have also gone to great lengths to show them price differences and teach them comparison shopping. My son wanted an IPOD for Christmas, when I showed him the cost versus the cost of a regular, actually cooler looking MP3 player, he was sold. It was nearly a $50 difference, all because it didn’t have the IPOD name. And it works just exactly the same. I have done this with many different items, that was just an example.
Encouraging your child to save, and discussing what saving means for them not only short term, but long term too, is important. You might even wish to show your child what interest is, and how it adds up over time. Show them how having a certain amount in their account for any length of time, will help them earn interest which is essentially free money.
Just talk to your kids about money, and how to save. Talk to them about budgets, coupons and anything else, and you’ll be surprised how much they learn!