The earlier you start to teach your child the value of money, the better. Horace Mann wisely compared habits to a cable: you weave a thread of it each day, and, soon enough, you cannot break it. Just like the bad ones, good habits can also be learned early and at home. Then why should good money habits be any different? What is more, research has shown that it is best to start with the lessons before the age of seven because money attitudes and habits are already formed by then. So, moms and dads, best to teach them young and watch them grow!
How to teach your child the value of money while in preschool or kindergarten
Give them a visual
Children, especially at a very young age, hardly understand the concept of money. For this reason, your five-year-old doesn’t need to know about investment just yet. Finding tangible ways to explain abstract notions is critical if you want to help them understand that that little thing you call a “wallet” isn’t the source of limitless cash. Solid-color piggy banks, for instance, do not give kids a visual. On the other hand, with a clear jar, they will be able to see the pile growing. Then, be sure to talk through this with them and make a big fuss of it growing!
Practice what you preach
Those little eyes see and absorb everything; make no mistake about it. Therefore, setting your own example is the most crucial strategy when trying to teach your child the value of money. Spending frivolously and slapping down that piece of plastic every time you leave the house while, at the same time, preaching about the importance of saving sends mixed messages. Instead, you ought to model the behaviors around money that you would want your child to adopt.
Shop till you drop
We get how contradictory this sounds at this point; however, this is not to suggest that you go on a shopping spree. Well, not a real one, anyhow. You need to find a way to help your children understand the basics of commerce, so they can start to understand just how valuable money is.
Little ones love to play store, but a pretend shop in your living room is not merely a way for them to exercise their imagination. Bring those cereal boxes, sponges, fruit, or paper towels out of the drawers and cabinets, make some pretend money, and open an imaginary shop right there in your living room. Money games are a great way to show them that things cost money and that finances are just another part of life. Plus, they’ll have a much greater impact than a five-minute lecture.
Another way to do this is by helping them grab a few dollars out of their savings jar, bring it with them to the store, and then physically hand it to the cashier. Grocery shopping is also an excellent opportunity to introduce comparison shopping. You can let them compare brands and generic products, talk through the decisions with them, and look for things on sale.
How to teach elementary students and middle schoolers about the value of money
Instill a goal-setting habit
Instilling a goal-setting habit from a young age is a fantastic way to teach your kids financial responsibility. It educates them about the process and benefits of saving, encourages a patient approach to money management, and shows the value of delayed gratification. It is best that the goals be modest and not any big-ticket wants. That is because kids too often “want it now”, and with short waits, there isn’t much time to practice patience. For this reason, it is best to start small and then build the habit from there. This is effective because it teaches discipline to put some money to the side for a later benefit, one that is much more rewarding. At this age, a child will be able to weigh the decision and recognize the potential outcomes.
Make them pay
Yes, in the course of setting goals and practicing patience, you’re, in fact, teaching your little one how to spend. However, this doesn’t need to be a theoretical exercise. Real-life experience is always better than any simulated role-playing. Consider placing your children in a position where they are actually making the purchase.
For instance, textbooks, haircuts, sports, and dinners are all expenses you need to pay out of your pocket. Alternatively, decide on a fair monthly sum to give to your child to pay for their own needs. Then, make sure they know that you won’t pay anything else for them that month, and they need to choose carefully between needs and wants. This will help teach them a thing or two about the value of a dollar.
However, below we consider why it may be wise to make this a one-time thing and not a regular practice.
A penny for Dave Ramsey’s thoughts
Dave Ramsey has a particular attitude on allowances. He believes that giving kids an allowance does not teach them how life really works. So, what should you do instead? He concludes that they should be paid commissions based on the little things and chores they do around the house. Of course, it’s important not to overwhelm or discourage younger kids. Aim to keep their tasks short and sweet. Some examples may include picking up toys, making their bed, cleaning their room, taking out the trash, or putting their dirty clothes in the laundry basket. Tying activity to earnings teaches them that money comes from working. Finally, they’ll start to make better decisions about how they will spend the money they’ve earned.
Teach selflessness
Don’t forget to emphasize the importance of giving and that money is a powerful tool they can use to help others. This is once they start making a little money, of course. You can do this by helping them develop a spend-save-donate system, where they divide their earnings into three parts. Then, help them pick a charity to donate one portion of their savings. Besides building some math skills and handling money mindfully, this practice helps them to foster compassion. They’ll learn that giving and selflessness influence not only the one who receives the charity but the giver as well.
How to Teach Teenagers About Money
Talk household finances with them
Experts believe that including your teens in the family talks about money is vital to their financial literacy. Seeing you make financial decisions may help introduce them to budgeting, teach them about managing money and how financial issues are worked out. Make this a regular practice, and be sure to include them in decision-making. There can be a role for a kid of any age to play, even if it is a small one, and even with more important decisions like relocation and choosing a new home. For instance, you can let them participate in the planning and execution of the move. Smaller kids can paint the moving boxes or choose some toys to donate to a charity, while older teens can help you plan a budget.
Set them up with a simple bank account
Giving your teen the responsibility of a bank account will bring money management and saving habits to a whole different level. What is more, this can help to equip them for managing a larger account when they are older.
Beat the feelings of discontentment
“I never get what I want”- one of the most common expressions one can hear from today’s teenagers. They often connect having more of what they want to happiness and satisfaction. And, yes, social media hardly helps the case. This is where it gets tricky for parents to convince their kids to be satisfied with what they have. Spend more family time with them, teach them about living within their means, find a way for them to serve others, and connect with the less fortunate, and you may see a change of heart.
Get them involved in saving for college
There’s no time like the present to start to motivate your teen about saving for college. The cost of college is high and steadily rising. So, it is time for the talk! Let them know that funding their education through a student loan is not an option, and talk through the alternatives. Secondly, encouraging them to find a way to contribute toward their education will help them feel like they have skin in the game. They can figure out how to make money, as well as plan how they will save some bucks on their living situation while at college. Finally, they can learn some tricks to relocate in a frugal way when it is time to pack and move to college.
Help them find a job
Fall breaks, summer breaks, winter breaks, spring breaks – starting to think about it, teens have lots of free time, don’t they? You can encourage them to take a simple part-time job such as babysitting, dog walking, or lawn mowing, or you can even support their entrepreneurial spirit. Working can bring them some extra cash and serve as a significant confidence booster when they are successful at it. On a larger level, it is a great way to teach your child the value of money, as they get to learn about it first-hand!
