Like most people, I have memories of grownups spouting off, “money doesn’t grow on trees!” as if it were some bit of magical phrasing that would suddenly stop me from wanting whatever it was I wanted. There’s wisdom in the saying, true… but it should not be the end of the parental lesson on finances. Over the years, and now, as the parent of an adult child, I have actually come to think of it as a good starting point.

“Yes, little Mark (Sue, Zenda, Pat…), money does grow on trees and you may have that item just as soon as your tree has grown the money! Now, let me teach you how to plant and grow a money tree…”

See what I mean? It’s a pretty good place to start. But what next?

How To Teach Your Children To Grow (er, Save) Money

Tip #1: Incorporate money lessons into everyday discussions.  Managing money is a skill you use every day. You can use real life situations to teach your children valuable lessions such as “wants vs. needs,” making savings a habit (every time money comes in – birthday presents, allowances, etc. – set some aside for savings), and accurate recordkeeping.

Tip #2: Speaking of allowances… Start those early too. Money becomes meaningful for children when it is tied to reality. Provide them with opportunities to earn their allowance by doing age-appropriate chores: picking up their room, taking out the trash, doing laundry, etc. This is how it works in the adult world: you work, therefore you earn. Once you have earned, you can spend. And if you want something that costs more than you earned? Well, then you learn how to set a goal and to save.

Tip #3: Provide the right tools for saving.  For younger children, this may be as simple as a piggy bank; it provides a physical location that is dedicated to saving. Once your child has reached the goal-setting age – which is as soon as they want to save up for something in particular – you can add a second bank. One bank can hold the money they’re saving for their goal, and the second can hold their spending money (to use for small items or treats when they’re out and about).

Once they are regularly receiving income from an outside source, such as when they start babysitting, mowing lawns, etc., it’s a good time for them to get their own bank account. These are sometimes called “custodial accounts” and include the name (and oversight) of the child’s parent or guardian.

Tip #4: Teach accountability.  As soon as your child starts to understand that computers are a place where you can keep notes for yourself (which is really just what financial records are), you can introduce them to whatever accounting software you use… Excel, Quickbooks, etc. It does not – and should not – be complicated. The goal is to teach them how to do basic recordkeeping, and to make it a habit, so they know how much money they have and can watch their savings grow. If they have a bank account, it may just be a matter of using the software the bank provides.

Growing savings, like growing trees, requires patience and practice (especially if you want a big tree), but financial stability is something we give our children by teaching them to be money smart from an early age.

How I Can Help

Tax time is upon us! If you need help getting organized, you know where to find me.  What you might not know is that I am available to teach adults and families how to use accounting software like QuickBooks or Quicken. If you don’t have a desktop accounting method, give me a call. I can teach both you and your children how to set up a system that works for you and your needs.