5 Things Wise Parents Do That Quietly Teach Kids The True Value Of Money, According To Psychology
Parenting habits that help children develop lifelong financial wisdom.
Hello Revival | Unsplash There is so much to teach your children. For starters, say "please" and "thank you," wash your hands, respect your elders, and chew with your mouth closed. Meanwhile, advertisers spend millions trying to teach our kids to spend more.
It's true. Our children see more than 25,000 ads a year on television screens alone. Fortunately, even with all of those advertising dollars being spent trying to teach your kids that they need more, these five tips can combat those messages and teach your kids basic financial literacy and the value of a dollar.
Here are 5 things wise parents do that quietly teach kids the true value of money, according to psychology:
1. How to separate wants from needs
Yuri A / Shutterstock
Don't assume your child can readily see the difference between what they want and what they need. Sit down with your son or daughter and create two lists.
Make one list for necessary items such as clothes, shoes, lunch, school supplies, and medicine, and another list for items they want, like jewelry, trendy fashions, games, and electronics.
Readily see the difference between what they want and what they need. Compare the lists and talk through the differences. Point out the fact that you can't go to school without shoes, but you can go without an iPad.
2. How to say no and mean it
fizkes / Shutterstock
Kids figure out at a very young age whether mom or dad changes their mind if they whine enough. Often, they learn that if they keep begging, you will give in.
Next time you find yourself exhausted and ready to hand over cash for the remote-control hamster, stop. Say "no" and stick with it. Your children don't need to be in control of that hamster or your family's money matters.
When parents are consistent in setting boundaries around spending, it helps children understand limits and fosters self-discipline. A 2024 study suggested that saying no allows children to experience the discomfort of not instantly getting what they want, which is vital for understanding the link between choices and consequences.
3. How to practice patience
DimaBerlin / Shutterstock
Teach your child the value of delayed gratification. In a time where everyone wants things faster and easier, patience can be a difficult lesson, but it will serve our children well for their entire lives.
Create a "save-for" list at home where they can write down a few things they're saving for or waiting to get, and stick it on their bedroom wall. Patience takes planning.
Children who learn to delay gratification are more likely to understand the concept of living within their means and balancing spending with saving. A 2019 study argued that this fosters responsible financial habits that can prevent impulsive spending and debt accumulation later in life.
4. How to earn money to buy things
fast-stock / Shutterstock
If they are certain they "must have" that certain something, help them earn the money to buy it. Putting in some effort to acquire something makes the purchase more satisfying.
They could create a progress chart for their room so they can watch their incremental labors move them closer to their goal. You may even find that if they pay for something themselves, they take better care of it and appreciate it far more than if it were handed to them.
There are even times when their effort over time is required, their desire for the "latest and greatest" mysteriously evaporates.
Research indicates that teaching children about money, including how to manage wants versus needs, is crucial for developing a healthy understanding of its value. By involving kids in age-appropriate financial decisions, like budgeting for desired items or understanding the concept of saving for something they want, parents can help them appreciate the effort required to earn and manage money.
5. How to save now, spend later
Ground Picture / Shutterstock
Sometimes your mom's mom was right: You need to save it for a rainy day. If they are constantly spending all they have, or trying to spend all they have, nothing will be left when the unexpected — good or bad — arrives.
Each time your child receives money, encourage him to divide it into three "S" piles: spend, save, share. Talk through the reality of rainy days and happy opportunities that you don't anticipate.
Spend some time considering others with less and how your child might help. You can encourage saving and give it a little boost by matching the money they set aside with a set percentage of your funds.
Teaching your kids the value of money is an investment both of you can take to the bank!
Saving will come more easily for some kids than others. We all have unique perspectives on money, and some money personalities enjoy saving more than others.
But everyone can learn, so invest the time to instill the value of money in your children, and someday they may thank you. And those in line with you at the store may even thank you now.
The Money Couple helps others achieve financial freedom while putting family first. They offer services and resources to bring couples closer together, not only in their marriages but in their finances as well.
