Association of Military Banks of America

5 Things to Teach Your Children to Instill Positive Money Attitudes

By Amanda Mitchell, AFC® Candidate

I grew up in a family that had a lot of financial stress. Money was a common topic my parents argued about. Finances were not openly discussed, so most of the money attitudes I developed came from overhearing arguments. Not having enough or spending it on the wrong things were repeating themes. I then grew into a young adult who had an unhealthy relationship with money and started “hoarding.” While this is not the worst habit I could have developed, it was still unhealthy because I was constantly worried even though I had saved what I could.

Kids develop relationships with money surprisingly early.  Here are a few ways you can set the conditions for your child’s future financial wellness:

Opportunity Costs

The opportunity cost of a decision is the value of the best alternative that is given up. For example, if you choose to purchase your lunch for $10 instead of packing your lunch which costs $5, the opportunity cost is the additional $5 given up. Opportunity cost represents the potential benefits you miss out on when you choose an alternative. Opportunity cost is important because:

  • It forces you to slow down and consider the pros and cons of a decision.
  • It helps you to avoid impulse buying.
  • Allows you to consider all options and realize what the best choice is to do with your money.

Value vs. Cost

Sometimes the cheapest option is not always the best option, and it takes a bit of extra thought to figure that out. Use shopping as a learning experience. Talk them through why you are choosing specific items. Here are a few ways you can incorporate value vs. cost into your shopping conversations:

  • Show them how to calculate the price per unit. Give them a calculator to go shopping with and help them make calculations to choose the best value.
  • Think out loud. Discuss things like quality and how particular functions and features of certain products make the extra price a better value.

The Value of Giving

Everyone’s definition of being wealthy is a little bit different. Teaching our kids that being wealthy isn’t only about how much money in the bank or how many assets you accumulate highlights the emotional benefits money can offer. They say money cannot buy happiness, but honestly, I don’t think that is entirely true. It’s all in what you do with it. Sure, buying things to fill a void will never make you feel better, but try using your money to help someone or make someone else happy. The results can be surprising. Here are some ways you can encourage the giving spirit:

  • Let them see you give. Whenever there is something like a book fair or something at school where the kids have an opportunity to buy something, I try to give them an extra couple of dollars to give to their teacher for a kid who didn’t have money that day.
  • Create opportunities for sharing. At my children’s school cafeteria, they have cookies for sale for $0.50. Every once in a while, I will send them with a bit of extra money to buy themselves and a friend a cookie. It’s a small gesture, but I really think it has a more significant impact than just getting a cookie.
  • Find a cause your kid can get excited about. Use your child’s interests to guide you. If they like animals, encourage them to give to a zoo or an animal shelter. When my daughter was a Girl Scout, the troop decided to use some of their cookie sales money to help dogs. So instead of just giving the money to the shelter, I took 15 scouts to a PetSmart and let them buy as many dog toys and beds as we could with our money. The following weekend we hand-delivered those items to the shelter. Even four years later, my daughter still mentions it from time to time.

Finances Shouldn’t be an Off-Limits Discussion

Being comfortable discussing money is an excellent way to help avoid the stigma that it is bad to talk about money. You don’t have to discuss your net worth or tell them how much is in the bank account. Simply being willing to talk about how money works, why we need it, and how to handle it responsibly will go a long way.

Splurging is Okay

Splurging seems counterintuitive, but allowing yourself to enjoy your money from time to time is important to develop a positive relationship with it. Ways to encourage healthy splurges are:

  • Use it as a positive reinforcement when big goals are met.
  • Break up your routine to avoid burnout.
  • Spend wisely on experiences that will bring you the most joy.
  • Know the difference between a splurge and impulse buying.

Find more great tips to help you teach your kids about money with the Consumer Financial Protections Bureau’s Money as You Grow.