One important aspect of teaching kids about money is helping them learn about the importance of charitable giving. When children start to get some allowance money of their own, it's tempting for them to think of this as all spending money. But along with teaching your children about saving and planning for the future, it's important to talk with your kids about charitable giving.
Charitable giving can start at a young age and can become a valuable lifelong financial habit. Let's take a closer look at why it's important to talk with your kids about setting some money aside for charities they care about.
People Learn Charitable Giving from Their Families
Where did you first learn how to give money away? A 2019 University of Arizona study found that charitable giving runs in the family.
The study interviewed college students, parents, and grandparents to learn how families share financial education and teach attitudes about money to younger generations. Even though they were not specifically asked about philanthropy, 83% of the people surveyed said that charitable giving was an important part of the financial education that they gave or received within their families.
Indeed, Charitable giving is more important to families' financial education and a bigger life lesson than most people might expect.
"When you think about money and what kids learn about money from their parents, most of us wouldn't think about giving as one of the basic principles of finance," says University of Arizona researcher Ashley LeBaron. “We tend to think more in terms of budgeting and saving and things like that, so it was surprising — but really cool — to see that giving was so prevalent."
Charitable Giving Builds Brighter Futures for Your Kids
Generosity is important for its own sake, but what if giving to good causes could also help your child live a happier, healthier adult life? The University of Arizona study also found that children who learn how to donate money from a young age are more likely to have better financial habits and better well-being later in life.
"People who are generous tend to be happier and have healthier relationships, so this is shaping not only kids' finances but aspects of their health and well-being," LeBaron explains.
Starting charitable habits at a young age can also apply to volunteer work. Another study of volunteer service from the University of Birmingham in the United Kingdom found that when children start doing volunteer service before the age of 10, they are two times more likely to make service into a lasting habit, compared to people who start doing volunteer service at ages 16-18.
The UK study also found that young people with a habit of volunteer service are more likely to:
- Recognize that their volunteer work brings benefits to themselves as well as to others
- Identify themselves with moral and civic virtues
- Believe that they have the confidence, opportunity, skills, and free time necessary to participate in volunteer work
If you want to raise a more confident, generous, socially involved and active child, teach them to volunteer their time and give their money to good causes.
Help Your Children Learn By Example
Kids learn so much from their parents, and one of the best money attitudes you can teach is to talk to your kids about charitable giving. Another study from Indiana University found that adolescents are 18% more likely to donate money to charity if one of their parents has donated within the past year. They are 33% more likely to give money if a parent has donated money and talked about it with their child.
Teaching your children to give to others, and modeling that behavior, can be an effective way to shape your children's behavior as philanthropists.
"Modeling is so important, but it's also important to talk with your child about why you give, or what you are giving for," said Jill Emanuel, director of coaching and a Certified Professional Financial CoachTM at Fiscal Fitness Phoenix. "It's never too early to talk about charitable giving, although the way you talk about it will likely evolve over time as your children age."
Here are a few tips on how to help children get started with charitable giving, and how to make generosity an activity for the whole family to share and enjoy together:
1. Set a budget for charitable giving. Help your child set up a “three-bucket" approach to their allowance money, where they save some money, spend some money, and give some money to charity.
2. Set a specific goal for charity. Talk with your child about how much money you might be able to donate to a favorite charity by giving up one restaurant meal as a family, or by buying one less pair of shoes for back to school. This can help your child visualize the impact of saving money to give to charity by adjusting their everyday spending decisions.
"If you're someone who tithes at church, talk to your child about all the good things the church does with that money," suggests Emanuel. "[Discuss] the causes it supports, the families it helps, and the impact that money has in making our world a better place."
3. Research charities together. You can use a resource like Charity Navigator to research charities and see how organizations utilize your donations. If your child would like to donate money to help a children's hospital, an animal rescue or wildlife fund, or an environmental nonprofit, make sure you're giving to a well-run, reputable organization.
"As children grow, you can begin to have conversations around what ways they would love to give, or what causes they would love to support," says Emanuel. "If the family participates in different charities or giving opportunities throughout the year, have your children pick a particular role they want to play."
As an example, she suggests your child choose a gift from the Prison Fellowship Angel Tree project during the holidays and let them purchase and donate it themselves.
The Priceless Bottom Line: Finding Purpose in Giving
Charitable giving can help your kids understand money in a new light, make better decisions about budgeting, and change their perspective on the real value of money as something not just to spend on themselves, but as a source of generosity and social good.
Ultimately, charitable giving can help your children make a difference in people's lives and feel better about money. Developing a young philanthropist will also help them develop a stronger sense of confidence in their own financial futures.
"Giving is a great way for a child to develop a healthy attitude around money," explained Emanuel. "Practicing giving from a young age provides the psychological 'proof' that there will always be enough. It is a wonderful way to prevent a scarcity mindset and foster a strong sense of financial purpose."