Helping kids develop a healthy relationship with money starts early. According to financial psychotherapist Vicky Reynal, the way children learn about money in their early years can deeply influence their financial habits as adults. Reynal, author of Money on Your Mind, explains that emotional experiences from childhood often shape how we think, feel, and act when it comes to money.
Reynal highlights how our upbringing impacts our mindset around spending, saving, and financial security. “Our emotional experiences growing up will shape who we become“, she says. For example, someone raised in financial security might feel confident negotiating for better salaries or enjoying what they’ve earned, while those who experienced financial struggles might develop patterns like overspending for validation or guilt.
The key strategy to develop good money habits
To set kids on the right path, Reynal suggests one powerful strategy: being emotionally responsive and reflective about money. This means creating an open and judgment-free space where children feel safe talking about money and learning its value.
Start by encouraging your kids to share their thoughts, feelings, and questions about money. If they’re saving coins in a jar, acknowledge their effort and talk about why saving matters. You could say: “I see you’ve saved a lot of money in your jar. That’s impressive! What do you want to use it for?”. This simple act of recognition validates their choices and teaches them to associate positive emotions with financial responsibility.
By engaging in these conversations, you help kids reflect on their financial decisions. Over time, they’ll develop a thoughtful approach to spending and saving, rather than one driven by emotional impulses. The goal is to make money a natural and approachable topic in your household, not a source of shame or mystery.
More suggestions to build healthy money habits
Reynal’s insights also include actionable tips for parents looking to instill strong financial habits:
- Model healthy behavior: Show them how you budget, save, and spend responsibly. If you’re making a financial decision, talk about your thought process, even if it’s as simple as choosing between two grocery items.
- Introduce scarcity and choices: Help kids understand that money is finite. When they’re deciding how to spend their allowance, let them weigh options rather than trying to fulfill every request. If they want a toy and a game, guide them through prioritizing one over the other.
- Avoid shame around mistakes: If your child makes an unwise financial choice, such as spending all their money on candy, use it as a teaching moment. Ask questions like: “How did that decision work out? What would you do differently next time?”. This approach keeps the conversation constructive and builds problem-solving skills.
- Celebrate financial wins: Whether it’s saving to buy something they wanted for a long time or successfully sticking to a budget, celebrate your child’s milestones. This reinforces the joy and pride that come with good financial habits.
- Teach the value of giving: Encourage generosity by setting aside a small portion of money for donations. This shows kids that money isn’t just for personal gain but can also serve to help others.
By being emotionally responsive and modeling healthy financial behaviors, you can help your children grow into adults with strong money habits. The earlier you start fostering these lessons, the better prepared your kids will be to navigate the complexities of financial independence.