How Your Children Learn Finances


Money is one of the things, among loads of others, that we, as human beings, need to learn step by step. At a young age, money, prices, income, and expenses are far too abstract for us to understand the larger scale of correlation and context. So it is up to us, as mothers, to make sure, our children learn finances. But how can we teach and guide the way our children deal with money? And when is the right point to start?

The Basics of Teaching Children Money

If we won’t teach our kids money’s worth, who will?! In order to start with this lesson, you should choose to start as early as possible. It doesn’t come as a surprise much, that children from financially rather unstable families are being exposed to that topic way earlier in life than kids that never suffer economic hardship. Because those children have to renounce personal wishes and desires far more often, and basically always because there’s not enough money available.

According to social education workers, however, this is by far the better strategy than trying to hide money issues or financial straits from children. The latter has no pedagogic worth whatsoever. They recommend you rather teach your children awareness for costs and financial limits, without overwhelming them, of course. This also means, even if you and your kids never have to face financial hardship, you mustn’t just unconditionally buy everything your child demands. It’s better to set boundaries — age-appropriate math examples will do just fine.

Experts also recommend to use pocket money as a means to teach your children deal with money. Instead of providing a buck here and another dime there for them to buy themselves something, choose a fix weekday to hand out the pocket money to your kid. This way, he or she learns to ration their income, and to save up for something they desire, but costs more than their weekly pocket money quota allows for. Ideally, you start pocket money training, before your children go to elementary school.

Young children learn finances with as little as a Euro per week. So this suffices. And the regularity has a huge advantage: Not only does your child learn to spend its money more consciously, but also to be patient — because, yes, it may take a little time, until you can make a wish come true —, and that money is an ending resource. So teaching children deal with money also means teaching them a better understanding for motherly boundaries. This is very helpful in moments when you’ll have to respond: No, we can’t afford that right now.

3 Specific Tips On Children And Money

Having children deal with money can be a tricky one. The good thing is, you’re halfway there, since children learn from observing and copying. So, your children learn finances from seeing you comparing prices in the supermarket, from looking at you updating your housekeeping book regularly, and they hear you talk about money — and in which way you do that, too, that is. On the other hand, yes, they do need active guidance in order to learn how to deal with money. FinMarie has 3 handy tips for you that show you one way of approaching this.

No. 1: Talk About Money

Whether money is or isn’t an issue in your household, make sure you talk about it. And talk about it with your children. Also: Watch how you talk about it. Especially among women, money and fortune seem to be still considered something negative or filthy. But when it comes to children and money, you need to overcome your personal disgust and speak openly about it. Only through an open communication will your children learn finances, their importance, and value. And they will lose their aversion towards money. In a best case scenario, they will grow up with a healthy and balanced idea of money and finances — and wouldn’t that be a goal to achieve?!

No. 2: Be Consistent In Terms Of Pocket Money

Pocket money helps children deal with money. Common recommendations are to grand a preschooler one Euro per week. From second grade on, it’s recommended to raise the pocket money by one Euro every school year. After elementary school, you should start handing them their pocket money on a monthly basis, rather than weekly. But not only is regularity a crucial factor when it comes to children and money. For children, dealing with money needs to be an essential lesson. So, a child-appropriate amount of pocket money, is just as important, as is regularity, and consistency. What does that mean for you?

  1. Your kids can decide for themselves what they want to spend their money on. Even, if they blue their first couple of Euros (which they most likely will), this, too, can teach them a valuable lesson. Because, if there’s nothing left, they won’t be able to buy something else.
  2. Don’t revoke or shorten their pocket money in order to punish or discipline your children. And neither give them bonuses in order to reward them. After all, your boss wouldn’t dare reducing or withdrawing your income, just because you once came in late that other day, right?
  3. To enable children to learn finances and sustainably embed that knowledge in their memory, you should renounce on advances or loans. Even, if your kids are a bit older, and know the basics of dealing with money, negotiations of that kind should remain an absolute exception.

No. 3: Saving Money Is Mere Child’s Play

You cannot expect children, who just made real contact with money for the first time, to understand the idea of Savin money. But there are ways to cultivate this habit in a child-appropriate manner. At this point, our first tip comes back into play. Talking is key — to establish a culture of awareness for savings, all the more. Arrange for gifts of money (the five bucks, nanna secretly slipped them, Christmas presents, birthday donations, asf.) to be at least in part collected in a coin bank. Maybe half of it, maybe 25 %. Even, if the concept of saving money won’t be immediately available to your child, the fun part definitely will: Most children enjoy putting money in a coin box … after all, the rattling sound is pure joy, isn’t it?! Once the coin box is full or International Savings Day has come, take the saved money to your local bank. Seize the occasion to explain to your child that the money isn’t lost, but the mister or the lady in the bank will even multiply it.

Would you like to know more about ways of increasing your children’s money? Our FinMarie consultants are happy to provide you all the answers and advice on investments for children you’re looking for — not just as women, but as mothers, just like you.

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