When it comes to money smarts, we often think teaching kids how to budget and save will set them up for greater success in life. But new research suggests teaching our children how to give their money away makes them more financially savvy adults.
"When you teach kids about charitable giving, you teach them to set aside a portion of their money for others, which shows them that you can split up your money for different purposes," says Leslie H. Tayne, a financial attorney and author of Life & Debt. "This is the foundation of budgeting and eventually translates to understanding the idea of putting money away for savings, paying off debt, retirement planning, and many other areas they'll need to set aside money for later in life."
The study also suggests generosity makes them happier and healthier in the long run. "Donating helps give children a sense of empowerment in our very uncertain and often frightening world, and it teaches them that even their small efforts can make a difference," says Tayne. "Often, the positive feelings involved with giving away money will lead to wanting to give more -- and in more ways than just financially."
Here are three ways to easily introduce the concept of giving to your kids:
Start small. Whenever your kids receive money, you can suggest a small amount to give away. For example, if they got $5 for their birthday, they could think about giving $1 to people or animals in need. And as they age, have age-appropriate conversations on the amount to be given. Saving change (even pennies) or using a "give jar" or another visual representation can also help them understand the concept.
Find a meaningful cause. Help them find something that they're passionate about. For example, if they love sports, there may be an option to donate to a cause that helps provide opportunities for children in need to play sports. Or mention causes that you have given to and explain why that particular cause is important to you. Your child may be inspired to follow your example. If you can, consider volunteering or visiting the organization you're donating to so your child can see firsthand how their donation is being put to use.
Choose how often to give. Figure out what works for your family -- you can give once a week or once a year. "There's no set time to give," says Tayne. "But the holidays are often special times for families and a good time to teach them about giving to others."
By the Ages
How to teach kids to give as they grow, according to Tayne:
- 3 to 5: Though they're probably not old enough to have money of their own, you can still talk to kids about the idea of charity and what giving means to you and to them.
- 6 to 12: Once kids begin receiving their own money for birthdays or allowance, encourage them to set a portion aside for charity. "At this age, they will begin to have a stronger understanding of the idea of giving back and that there are others who have less than they do," says Tayne.
- 13 to 18: When kids get their first job, suggest they increase their charitable contributions based on a percentage of what they're making. "While most teens are naturally more self-involved, they're still capable of compassion and empathy," says Tayne. "Giving reinforces those emotions, which will take them very far in life."
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