Parenting is hard. From the moment you take that bundle home and try to figure out how to take care of it, you are in for it. A lifetime commitment of small steps that grow a tiny mewling baby up into an adult. We want the best for our children, we want them to be good people, to have great success, and to be happy. What we may not think about as much, when scheduling soccer, and tutors, and fishing crayons out of pockets in washing machines, is what financial values we are teaching our children. The truth is, whether you are having money talks with your kids or not, they are getting an education by watching you. Studies have shown that children may have already become set in their money behaviors by the age of 7![i] Since a 7-year-old is not doing a lot of accounting and bill paying, it makes one wonder what they have learned by then about money? Good or bad, those lessons have been coming from their parents. Every coffee through a drive thru, every comment about bills, every time you say no at the store. It’s been building a foundation that your child will carry with them. The best advice for any parent is to not think about financial education as a few conversations over a childhood, but rather a process where teachable moments are found everywhere and open talks about money are part of the household.

Start Young

Panicking? The point of this article is not to alarm, but rather to inform that whether you planned an economics lesson or not, you’ve been teaching one. Ideally, using the information and advice provided in this article, you can practice a little more mindfulness in how you deal with money in your home. By the tender age of 3, a small child can understand the most basic aspects of money.[ii] They can comprehend spending and saving. This is also a good place to start exploring the difference between wants and needs. Encouraging sorting through old clothes and toys and donating to charity can help illustrate that not everyone is as fortunate. An old toy can be a new toy for someone else. Gratefulness and generosity are wonderful values to pass along. Finding ways to teach them the value of money as they get older, by doing chores and later, receiving an allowance helps them to understand that their work has value and that money, when saved, grows. As children mature they can understand working toward, or saving up, for something they really want. Earning it through their own hard work, savings and patience will make it all the more valuable.

Daily Lessons

Remembering that YOU are the ultimate teacher, find opportunities in daily life to teach your children about personal finance. A grocery store is a great place, as you have to go there frequently, often are following lists and have a budget to follow. Price comparisons, coupons, and keeping to a certain amount are great lessons for young people. Based on the age and maturity of your child, allowing them to understand the costs of running your household, and even telling them of your financial mistakes can be good lessons. Most parents want to shield their children, but talking about mistakes and how you fixed them and learned, is a good lesson. Allowing space for children to make their own financial mistakes and learn their own lessons is important. In life, people stumble, and allowing the space and communication to talk openly about bad judgement calls and how to fix them is a wonderful lesson for everyone. Making charity and philanthropy a part of your household is also a wonderful teaching tool that both imparts the value of money and the value of generosity. Volunteering and donating to charities help illustrate how much need there is in the world.

Bigger the Kid, Bigger the Lesson

As kids get older, their need to understand finances grows. Unfortunately, very little time is allotted in a high school curriculum for personal finance. Only 1 in 3 high schools in the US requite a finance or economics class.[iii] What that means is, if they aren’t getting a financial education at school, or at home, then they are at a real disadvantage entering their college and early adult years. At 18, these young people will have to make large financial decisions regarding financing vehicles, managing credit cards and taking on student loans. Making sure that your teen has as much information going into the early adulthood, especially about credit and interest, can save them a lot of headache and heartache down the line. A great teaching tool for a teen is a vehicle. Understanding how much they will need to buy one, to insure one, and the daily upkeep and unexpected repairs, is a crash course in financial life responsibilities. A part time job is also a valuable tool for teens. A boss, unlike at school, can and will fire someone for not following through. A part time job will also give your teen their own money, which gives an opportunity to open their own savings account and start saving.

Looking Ahead

The data regarding recent college graduates is a bit dire these days. The student loan debt is over the trillion mark[iv] and a large percentage of graduates have had to move home after college. Huge student loan payments send young graduates into the work force already in debt, forced to delay larger investments like cars, buying a home, getting married, or having children. The average American graduates with $37,172 in debt and the average monthly payment is around $393 a month.[v] Helping your child look past the brand name aspects of choosing a college and a major and exploring how they will pay for it, can help prepare your child. If you have been teaching your child financial responsibility along the way, from a 3-year-old helping around the house for pennies, to someone who has grown up having frank conversations about budgets, managing a household, and knowing the difference between a need and a want. That is a child that is prepared to have real conversations about how they want to spread their wings and how they will pay for it going ahead.