The Money Imprint: 7 Financial Conversations to Have With Your Child

How allowance and other methods can teach the importance of being financially savvy.

If you’re a parent, you know the challenges that come with raising children. It’s a fulltime job trying to teach your kids to be honest, responsible, to value hard work and, at the same time, encouraging them to be kind and respectful.It’s a lot and sometimes you have to pick and choose what matters most for your child.But if you haven’t been teaching them the importance of being financially savvy, you might want to make it a priority.One practical way to help kids learn about money is by giving them an allowance. You can tie it to doing dishes or feeding the dog, demonstrating that money doesn’t magically appear “just because.” But it’s not necessary to connect cash to chores. Some parents believe helping out around the house should be a given and see an allowance as simply a tool for learning money management.Either way, you can use the weekly allowance (and related discussions) as the medium to experience and gain comfort with making money decisions.

Whether it is spent or saved, for many kids, this stipend becomes part of their “money imprint”–the lessons learned early that form their thinking around finances.

1. You can only spend the money you have.Helping your child understand this concept sets him/her up for a lifetime of good money stewardship (not to mention will likely prevent them from being saddled with credit card debt that follows them throughout their lives). 2. Budgeting will help you plan for what you most want.When you provide structure and context to making allowance payments, you are also setting expectations. You might share examples of how you budget in your company or in your personal life and how important responsible money management is to satisfaction and comfort. 3. Delayed gratification isn’t a bad thing.Design an allowance that, first, fits into your cash flow and second, is not so much that your kids don’t need to practice delayed gratification. If the amount is so high that they can simply use their allowance to cover all their wants, then you deny them the opportunity to practice patience, planning and prioritization. 4. Think strategically about money.Showing your kids how to plan and consider options for how they wish to conserve and use their resources is an important skillset for their future success in whatever they do in their lives. 5. What you get (gross) isn’t always what you keep (net).While it may be too soon to start explaining taxes, it’s never too soon to help children understand how to think beyond the cash in their hand. For example, I encourage my clients to set up a system where a certain percentage of the allowance must be saved and a percentage should go to charity. 6. Every mistake is a learning opportunity.Your kids will undoubtedly make some bad money decisions along the way–they’re young and they’re learning. Maybe they blow their allowance on a toy that breaks right away. Allowing them to sit with their mistake instead of bailing them out with a cash infusion will prevent them from making the same poor choice again. 7. Understanding money can be fun.Learning doesn’t have to be painful and money lessons don’t have to be scary. Set up reasonable goals with built-in incentives. For example, if he/she saves $100, you add a $10 bonus. Related: The Lessons I Learned at 13 Are Very Relevant Now It may sometimes be challenging trying to impart money lessons–but your best role here is that of coach vs. stern parent. Asking questions about their choices and challenging their thinking will help them see options they wouldn’t otherwise.Celebrating their successes (and encouraging them after failures) sets them up for a lifetime of being both resilient and money savvy. The discipline and responsibility learned at a young age can translate into a life that is equal parts success and happiness. Isn’t that what we all want for our children?