If you don't consider yourself or your family wealthy, then what do you think your kids are learning about money? If you don't include a financial mindset in their ongoing lessons about life, then who will teach them?
Kids are everyone's future, and the kids anywhere in your extended family are close enough for you to influence that future. But, if you feel you "have not arrived yet" in a wealthy life, you'll need to consciously include the children in a new way of thinking about money and wealth. You have the power to change their lives, if you give them enough tools.
Learn and apply wealth-mindset principles to yourself first, because children will believe you when they witness your life example as the authority. Your behavior and experiences will be much more powerful than your words. But they need to see you work a plan from the inside out. When they see you becoming wealthier, they will have the formula, and it will be natural for them to build on that foundation.
There are 11 things that you can do with children to teach them about the pathway to a good, healthy money mindset:
1. First, you have to get over the fear that money is evil. It's not. Neither is "the love of money." It's lack of money and skewed values attached to fears that causes money to seem evil. Money is an amplifier of behavior and beliefs. Good values and purpose-driven beliefs cause amazing results using money. But unless you address any underlying resistance you have to it, you will not be able to authentically teach a wealthy mindset. Love what it can do for your life and bring the feel of increase of money front and center in your thinking. Show that you enjoy it, and teach that example.
2. Include kids inside your positive financial discussions and decisions. They will observe you and hear your words. When spending needs to be restricted, they will see that as lack, unless they see the bigger picture of responsible flow and a commitment to a stewardship of money, at any level of wealth.
3. Never say "no, we can't afford it" to what they are asking -- there is a danger that you might shut down their incredible power of asking life for what they want. Tell them "I will think about it." if you are unsure how to respond. Tell them clearly if it is not a priority at the moment. All spending is based on current priorities, and you find money when you need it. If they are asking incessantly at weekly grocery shopping, reiterating this priorities statement each week will show them so much without teaching them lack. Again, tell them, "Let's put it on the Wishlist!" if it is in your value set and let them feel the pride in saving for what they want to acquire, big or small things. Teach them that it's not the amount, it's the priority.
4. Give them their own money to spend/share/save based on their own values (without judgement), like their weekly allowance. One exception to this freedom is #10 below, when your values and theirs differ. But don't give the money with obligations, guilt or negative emotional strings attached.
5. Teach them about the 10 Percent Fallback principle. This is simply the practice of immediately setting aside 10 percent of any income and holding it for seeing and feeling their wealth grow. Have a further part of it set aside for spending, but show them how a back-stop is powerful when their bank account is never empty.
6. Show them how to use vision boards and imagination to focus on what they want. Even if they clip one picture of an item they are saving for, show them how to stick it to their closet wall and look at it often, imagining what it will feel like when they own it.
7. Start their Wishlist with them. Let them write down a list of items or experiences they'd like to have. Their subconscious will then focus on ways to move toward it. Let them enjoy the energy of completion when they experience the pleasure of ticking it off their list. Birthdays are a good time to teach them to write the next year's list. You can also have a family Wishlist behind the pantry door, and whenever anyone wants to have or experience something shared by the family, you can all write it down together, and enjoy the fun of "scratching it off the list" together when it arrives. It teaches delayed gratification too.
8. Limit your larger "gifts" to twice a year: birthdays and one other time (like Christmas), or a special reward for an achievement. If there is any other extra gift it will then stand out as a true gift. Let them save and buy any other things they want from their own allowance or earnings.
9. Use money as a reward for success (never punish with money). For example, give them $5 for every A grade in school. If they are not an A student, this may be the incentive for doing something they like in their elective classes, or push themselves a little more to get a higher final grade. Don't do it in front of the other children; make this a personal conversation so you are not comparing them or their results to each other. To make a fun cash reward, use the Easter Egg Hunt to wrap money around one of the Easter eggs. Make it non-competitive though, so each child has the opportunity to win; provide one money egg for each child, and tell them the rules of fairness: "Once you find yours, if you find another, it's not yours -- and leave it for the others."
10. Tell them "no" when their request for spending or gifts clashes with your values, and tell them why. Your values must be honored too, and for instance, if violent video games or inappropriate purchases clash with your values, tell them. You are in charge of the values of your household, but they need to understand why you might be denying them, whether or not it is a priority of available cash. Also, they learn that eventually they can use their own set of values on their spending choices. Maybe by denying their spending based on carefully explained values, they might see when they are just wanting "stuff" because everyone else has it, rather than reaching for their own choices of values.
11. If they say, "But you can afford it!"when you have plenty of your own wealth available, again, teach them to save for their own desires. As they get older you can even allow them to borrow money from you and pay it back, just like the real financial world they will eventually enter. An established payback schedule will show them how to become responsible and methodical. They will probably also learn that the enjoyment of possessions often fades long before the debt is repaid. And, this will give them the opportunity to experience the ongoing limitations of being in debt, as they notice their repayments cutting into their future earnings or allowance. One more thing: Add the rule that they cannot borrow any more until they have paid off the debt. Note: Please don't charge any interest! That is not a useful real-world lesson, because learning about the cost of debt is not the early purpose. And they will resent your teachings if you are profiting when they have less and you have more.
In all, teach them the values-based healthy examples for how the world works, and you will allow them to naturally attract the most baseline resources for a successful life. Then they will learn to be responsible about increasing the flow of their income, managing their debts and expenses, and hopefully having more than their previous generations had. What a lovely gift to their future.