Financial confidence is a superpower

As cash is becoming more and more rare, it can be difficult for parents to explain and for children to understand the value of money. They see you swiping your card, paying with your phone, and ordering things online – but they don’t see the money decreasing. Therefore, you need to explain that money does not grow on trees. It is something you earn. Money is rarely a gift – which is an important lesson to learn.

Explain that your pile of money is not infinate. As you shop, it decreases – and eventually it’s gone – and then you can’t shop anymore. This is good to talk about on a regular basis.

By having a weekly allowance, your child can learn to take responsibility for, and manage, money. Most often it is a gift or tied to an achievement. Some parents instead give money when needed. Regardless of approach, it is good to be cautious so that your child does not learn to nag a little extra to get more money. Remind them that when the weekly allowance is gone, it is gone, just like your money. Another good thing about a regular weekly allowance is that, according to studies, it reduces the risk of over-indebtedness in adulthood.

Whether the weekly allowance is given in cash or digitally depends on how you use the money. Cash is easy to understand, because the child receives physical money. At the same time, children are digital.

Therefore, one idea might be for the child to receive a sum every week and then tracking it by writing it down or by using an app. It gives the child a better overview of how much money has been saved and how much has been used.

First and foremost – your child is smart and understands a great deal. Tell it like it is, that we have to pay our bills to have a place to live and to be able to turn on the lights. We also have to buy food, clothes, bus tickets, put some money away in savings, and so on. After that, we can buy what we want as long as we have enough money. Your child will understand.

At the same time, there will be times when your child nags about perceived needs. Thats when you need to say something along the lines of “Right now we cannot afford that, but you can put it on your birthday wishlist, or save up for it on your own”.

Research shows that goal setting is fundamental to learning the value of money and saving.

At this age, the child lives in the moment. That makes the temptation in the toy store incredibly difficult, but letting your child wait for a little while is really helpful. Let him or her write a wish list and maybe start saving part of the weekly allowance to be able to buy it in time.

If you decide that your child can do what they want with part of the weekly allowance, while part of it is saved for something the child wants, you are doing something really good. It teaches the child the importance of saving regularly. Start small and set goals that can be reached fairly quickly. When your child can afford a jump rope or a ball on their own, you will see the pride. Succeeding at this teaches the child that when they are patient, the reward will come.

It can be a good thing not to get everything you want all the time.

But saying no can be hard. Especially since it is actually a good thing when your child tries to persuade you, as this means your child is making his or her voice heard and tries to negotiate. At the same time, this does not mean that the child should always get what he or she wants.

An advantage of having younger children is that they don’t easily get caught in the comparison trap. They are not too picky about brands and are often happy with anything they get.

Your child can easily handle the fact that you and their friends’ parents have different amounts of money. Strengthening this understanding early on can be wise in order to prepare your child for the future when he or she will be more easily influenced by what others have.

To your child, it is not strange that people choose differently. Some buy large ice creams, others buy smaller ones. Some save money. Others don’t. There is a naive obviousness here that is worth cherishing.

Feel free to teach your child to be creative. Borrowing and lending things between friends is a good thing. Maybe they can trade with each other? And when there is something they really want – encourage saving towards it.

Remember to always take the child’s feelings seriously. If they feel like all the other friends have more toys, you need to talk about it. Such a conversation can teach you both a lot and give you a chance to point out things that your child has that his or her friends may not have.

One of the best ways for children to learn is through experience and hands-on practice. When you want to help your child learn about the value of things, it can be helpful to use everyday situations, such as comparing prices at the store. It is also important that you lead by example. Children are very observant and follow behaviors and habits.

By having a weekly allowance, your child can learn to take responsibility for, and manage, money. Most often it is a gift or tied to an achievement. Some parents instead give money when needed. Regardless of approach, it is good to be cautious so that your child does not learn to nag a little extra to get more money. Remind them that when the weekly allowance is gone, it is gone, just like your money. Another good thing about a regular weekly allowance is that, according to studies, it reduces the risk of over-indebtedness in adulthood.

Whether the weekly allowance is given in cash or digitally depends on how you use the money. Cash is easy to understand, because the child receives physical money. At the same time, children are digital. Therefore, one idea might be for the child to receive a sum every week and then tracking it by writing it down or by using an app. It gives the child a better overview of how much money has been saved and how much has been used.

Feel free to set a few basic requirements for the weekly allowance, for example, to clean your room. That way, the child understands that money requires a return performance, just like it is for adults.

Getting your child to make a budget is a really good thing. The key is making it fun and relevant to the child.

At this age, kids are very much “here and now”. If they have the money, they usually want to spend it right away. Try to get your child to think more long-term, and perhaps a little bigger. Working actively with counteracting impulse buying is a great lesson in your child’s development. A first step can be to ask your child to sleep on it before making a decision.

You can also suggest that there’s the possibility of buying something bigger, or better, if they save their money. Let your child choose whether or not they want to spend all their money on that new skin in the game, or if they would rather wait and buy the kick-bike in a while instead.

Kids are smart and they usually understand more than we give them credit for. Your child understands that you have to put food on the table and buy clothes. Therefore, it is good to clarify what is considered a must in your family. Explain that only when all the necessities are paid for, can we buy things that are fun, but only if there is money left.

The older your child is, the more expensive things tend to get. That is why it is especially important that you set boundaries. Let them know if there is no money left right now, or that they will need to wait for their birthday or Christmas. Explain that if there is something your child really wants before then, they can save up for it.

We use less and less cash these days, which can make it difficult for you to teach something as abstract as money. Your child sees how you swipe a card, pay with your phone at the store, or press a button on the computer.

Your child probably knows that you get money for what you do (work, study, etc.). However, it is not obvious that the money disappears when you swipe the card. You need to explain that when you work, the card is topped up. Then you can blip until the money you got is gone. Then the card must be topped up again. It works exactly the same way for the child with his/her weekly allowance or money that they earn.

Encourage your child to be entrepreneurial. Guide your child on how to earn money. Don’t forget to explain that another way to buy things is to save some of your money.

Feel free to sit down and list different types of jobs and salaries. Then your child can more easily work out what is required to buy a certain thing. It also means that your child understands the value of things and can put it in relation to the work effort. Maybe that toy isn’t worth a whole summer of mowing the lawn? Here, the child gets to make the choice, which makes the value more concrete.

Okay, the world has changed since you were a child. While you might have bought toys, your child is instead increasingly digital.

If he/she wants to spend the weekly allowance on a new skin, or a booster pack, in the game, let them. Don’t say no. This is how your child learns to choose and manage his/her money on something that feels relevant to the child.

Just make sure you don’t give the child extra money on top of the weekly allowance. Most likely, the game account is linked to you, so it’s important that he/she sees that the weekly allowance drops when the purchase is made.

Do you want your child to spend money on other things? Then give examples. This way, your child can make the choice and feel that he/she is doing the best with his/her money.

It is important that you talk to your child about the fact that families have different financial opportunities. Therefore, some may travel several times a year, while others may not travel at all.

When you talk to your child about why you can, or can’t do certain things, focus on your family’s situation. Explain that adults have different amounts of money. That money should be enough for both necessities and fun things.

Vacations trips for example, is a choice families make – if they have the money for it. Explaining this is important for your child’s understanding. Sure, they may get angry and disappointed, but they understand – and they love you just as much whether you travel or not. Be honest about your finances and say you can’t afford it, if that’s the case.

At the same time, it is important to take the child’s feelings seriously. It’s okay to feel disappointed about not getting to go on a trip.

Instead of getting caught up in comparisons, you can, together, decide on what you want to do, based on your wallet.

Your child often wants something and it’s actually great if the answer, when needed, is no. It develops the child’s financial competence and ability to take responsibility for their own money. But don’t just say no. Listen to your child’s arguments. It is good that he/she makes their voice heard. Encourage that, but dare to say no when necessary.

Emotions and economic behavior are closely connected. Therefore, children (and some adults) need to practice more when it comes to controlling impulses in connection with financial behavior, or dealing with frustration and being forced to wait.

Remember that impulse buys are rarely good. If you can make your child think before they act, you teach him/her to use his/her money better.

At this age children discover that other children may have more expensive clothes, travel more and so on. This is something you need to talk about.

Calmly explain that adults have different amounts of money because of what they do for work, or for other various reasons. It affects what a family can buy.

Also explain that families choose different things. Some want to travel, others think it is important to have a new car. Others save more. Start with yourself and explain to your child why you do what you do.

This can become a complex issue as the child can get stuck in the comparison trap. At this age, it starts to become important to have what others have in order not to feel left out. Therefore, it is important that you listen carefully to your child’s thoughts and feelings.

You may have to say no because there is not enough money, which can be hard to hear for your child. Family finances look different and the important thing here is that you make the most of your money.

With a monthly allowance, your child gets more responsibility, but also more freedom. This is the first monthly salary.

A basic tip: agree on what the money should cover. Then don’t get involved in how the money is spent. Let your child discover what his/her decision means – that’s how he/she learns. And surely it is better that small mistakes happen now, than that the child makes bigger, more expensive mistakes in adulthood?

It is quite likely that the monthly allowance is sometimes not enough. Then you can think like this:

It’s hard to say no when your child calls, but sometimes you have to make tough decisions, that’s part of being a parent. If your child needs money to get home safely – you give it to them. If, on the other hand, he/she wants to go for pizza with friends, despite the fact that the monthly allowance has run out, that is a completely different story. Then the extra money should be earned. Don’t give away free money.

Sometimes a no is needed for your child to learn something important in the long run. Giving in in the short-term can create long-term problems. Sure, it is convenient for both of you to avoid conflicts, but sometimes they are needed. Remember that a no today may create some frustration, but it will increase the child’s financial competence and ability to take responsibility for their finances.

Does this pattern happen a little too often – reconsider whether your child is ready for this type of freedom. Talk about it, see how the money is used, how much money the child needs, and how you could help prioritise. This lays a very important foundation for your child.

Remember that children’s and teenagers’ brains are not like adults’. You need to help your child think long-term and maybe a little bigger to counteract their spontaneous reactions and impulse buys.

Encourage them to always sleep on it to see if he/she still wants that thing tomorrow. Also, dare to give your child a little nudge in his/her financial choices to make him/her think longer-term.

The rule of thumb is: the older the child, the more long-term the goals can be. It makes your role more important. You need to help the child find his/her why, and show him/her how to reach their goal – and of course, how to avoid obstacles and temptations along the way. This increases the likelihood that your child will succeed, something that, in the long run, will create great satisfaction.

Practically speaking, it involves planning together and inviting the child into all decisions. That responsibility is part of the child’s important independence process.

Whether you use apps or paper and pencil, a budget is a way to plan income and expenses. First, you deposit the monthly payment. After that, your child gets to plan what he/she wants to do with their money based on the framework you set up together. It is important that it is clear what you as a parent will pay for and what your child is expected to use their monthly allowance for.

Coach your child to apply common sense. An example is to compare prices instead of buying the first thing you see.

Always follow up the budgets you set together to see how the outcome turned out. Then your child will see why there was money left over, or why the budget burst.

The buy now – pay later option can be expensive if you don’t know the terms. This is what your child needs to understand. It is crucial that your child understands that a credit purchase is a loan. If it is not paid on time, you have to pay interest on the loan. In other words, the final price will be higher than what you thought when you bought the item.

You need to have all the facts to make informed choices. Also, ask your child an important question: If you can’t afford to buy now, will you have the money when the bill comes due?

As a general rule, it can be smart to teach your child to save and buy when they can afford it, rather than borrowing to buy.

As your child gets older, he/she discovers that families have different circumstances, depending on how much money the adults have. At the same time, your child becomes increasingly independent and forms images of what he/she wants with his/her life. Maybe an important question to talk about is why you go or don’t go on holidays.

In these matters, you are the child’s most important role model. Listen to your child’s thoughts and make a plan together to one day be able to travel, or buy something else that costs a lot of money.

Three things are worth considering here:

At this age, your child is constantly influenced by influencers and social pressure. Therefore, it is important to avoid the comparison trap.

The older the child gets, the more aware he/she becomes that families have different circumstances. This is a complex question that many teenagers want answered. Questions of justice and injustice are common.

In addition to the fact that you need to be transparent about your situation, it is important to talk about the choices you and other families are making. Some prioritise travelling and expensive things while others can only buy the necessities.

Remember that it is natural to compare yourself to one another. We all do, but the comparison needs to be based on your situation and the choices you make. Not how influencers, for example, have it.

For your child, who is now becoming increasingly independent and looking for both his/her identity and place in the group, it is important to be included. Take these feelings seriously. When the child points out that everyone else has something, it’s because they don’t want to feel left out. It is a threatening feeling that affects how the child acts and thinks about money.

By understanding that and meeting your child in the right way, you can influence behavior and in the long-run affect your child’s view of money.

The tween/teen years are challenging, but also amazing. Your child is becoming increasingly independent and involved in decisions concerning his/her own life.

Interest is a percentage of capital and the easiest way to explain how it works is to compare money to dough.

When you save money in an account, the dough (the money) rises in all directions. The dough gets bigger and bigger – and in the end you have a much bigger dough and can make more buns. Translated into money – you usually get more than you deposit.

As good as this is when you save, it’s just as bad if you buy on credit. Because then the debt grows in the same way and the dough can rise very quickly.

The fact that your child does not always get what he/she wants is very important. This is how the child learns to take responsibility for his/her own money.

Maybe your child is trying to argue their case. Making your voice heard and negotiating is good, but here you have to set boundaries and be a good role model. This is because emotions, rather than rational thoughts, control behaviour. Therefore, both you and your child benefit from resisting impulse purchases. A “no” can feel difficult, but it doesn’t necessarily have to be a dismissal. Ask your child to sleep on it and see if they still want to buy that thing the next day. This gives the child time to think, which can lead to better choices.

Remember that your child is smart and understands what decisions and choices mean. Give your child that opportunity, it lays an important foundation for his/her future financial habits. Perhaps it also means that your child avoids a loan in adulthood and instead tries to reach the goal by saving.

So, don’t always say yes, but don’t just say no either. Help your child save and set goals – it’s the best way for your child to get something they want but can’t currently afford.