How to Raise Financially Confident Kids

Hello everyone! The following is a guest post by my friend Shannon Ryan from The Heavy Purse. Please join me in welcoming her to Color Me Frugal today!

 

As many of you know, Dee is a new Mom, which is an exhilarating and overwhelming time in a new parent’s life. There is no one more precious, and you want to do everything possible to give your child the best life. I feel the same way, which is why I made helping my daughters build a healthy relationship with money as one of my top priorities.

 

Note: This post may contain affiliate links.

 

How to Raise Financially Confident Kids

 

I look at my daughters and their friends and see such eager children who want to conquer the world. But I also know when they lack financial confidence and the ability to make good decisions with their money, the world might conquer them instead. One of my greatest concerns as a Certified Financial Planner has been the growth of financial illiteracy among our children and its affect on their financial well-being as adults.

 

The impact can be far-reaching, but it is also very preventable if we start engaging our children in money conversations and help them form good money habits and beliefs. Most parents don’t know where to begin, so today I’m going to share an easy way to get started through save, spend and share goals.

 

 

Help Your Kids Set Save, Spend and Share Goals

My husband and I started talking to our daughters about money when they were toddlers. We kept conversations very basic and focused on our family save, spend and share goals. By the time they turned six, they were very familiar with the concept and eager to set their own personal goals.

 

Step 1: What Makes Your Heart Happy?

The concept is ultra simple, but effective. Ask your children these three questions:

1. What is something that would make you really happy and is worth saving your money for?
2. What is something you want right now?
3. Who is someone (or something) that you love and want to use your money to bring joy into their lives?

 

Give your children plenty of time to answer the questions and encourage them to have multiple answers to each question and write them down. If your children are new to sharing, then have them set tangible goals, i.e. making cookies for Grandpa or buying treats for the puppies at the animal shelter. A tangible sharing goal has a bigger impact on kids than sending money. Once they have successfully achieved a few sharing goals, then a money gift is a fine sharing goal.

 

Success Tip: Give them the freedom to dream, but if there is anything on their list is that is unrealistic, such as saving for a pony, tell them now. Don’t let them set it as a goal.

 

Step 2: Select Your Save, Spend and Share Goals

Now it’s time to narrow the list down to their save, spend and share goals. Take the first item on their save list and compare it to the next and ask them, “If you could only have one, which one would make your heart the happiest?” Then compare the one they chose to the next item on the list and repeat until you reach the end of their list. Now they have their save goal and can repeat the same process to set their spend and share goals.

 

Success Tip: Kids have a natural tendency to want to spend all their money at once. Explain to them why it makes sense to always leave a little bit of money in their spend jar for those times when they find something unexpected they want.

 

Step 3: Set Up Your Save, Spend and Share Jars

We use jars for their save, spend and share goals and every time they earn or receive money, they automatically allocate money towards their goals. You can also use piggy banks or envelopes too. Just be sure to use three containers and label them with their save, spend and share goals as a reminder that their money has a purpose. We talk about their goals frequently to keep them motivated since children can lose interest quickly if you don’t keep their goals front and center.

 

Success Tip: Celebrate goal achievement. Your enthusiasm will magnify their own. And then start over again and have them set a new goal. You want them to see goal-setting as a continual process.

 

My girls love setting save, spend and share goals. Their money has purpose now and it helps guide their money decisions. When they see things they like at the store, they slow down and compare them against their goals. They have gotten so good at identifying what really makes their heart happy and don’t want to waste money on things that don’t. They understand the things that truly make them happy are worth saving for. These are great habits for both the young and old to embrace.

 

Making Money Conversations Fun and Easy

Financial literacy is my passion, and it is easy for me to talk to my girls about money, but I know it’s a struggle for some parents. One easy and fun way to help you start these important conversations and shape how your kids think about money is through my children’s picture books. I’m pleased to offer Color Me Frugal readers an exclusive coupon code TOUR3114 for $3.00 off my new book, The Lemonade Stand. Join Lauren and Taylor in their continuing money adventures as they teach their friends, Ryan and Christopher, how easy it is to save, spend and share.

 

About the Author: Shannon Ryan is a Certified Financial Planner and a Mom on a mission to help busy parents teach their children simple, value-based principles that guide their money decisions and support their long-term financial well-being.

 

 

 

 

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Photo:  velkol/Depositphotos.com