Every parent wants their children to be safe and happy. And the best way to achieve this is to teach your kids how to take care of themselves, be independent, and make the right choices in life. This is an important task that encompasses many different aspects, including financial responsibility, which includes teaching kids about money management. Sometimes parents don’t want to start teaching kids about money from an early age. Usually, that’s because they think it will burden the kids and make their childhood less magical and carefree.
However, this is far from the truth. Whether we like it or not, money is essential in our daily lives. It influences where we live, what we eat, education, lifestyle, and many other things. For that reason, it’s crucial to talk to your children about it and help them become financially literate and lay a stable foundation for the future. Of course, how you approach this topic will depend on the kid’s age and your goals. With that in mind, we’ve prepared these excellent tips on how to approach this topic!
Introduce your kids to the concept of money at an early age
If your goal is to shape your kids’ thinking, feeling, and values about money, it’s never too soon to start. Studies show that children acquire their money attitudes and habits by the age of seven. Of course, this doesn’t mean you should begin lecturing and giving PowerPoint presentations to your toddlers! On the contrary, there are many informative and fun ways to introduce the concept of money to your kids.
Showing is often better than telling, so show them when you purchase things at the store. Let them see you paying for items at the store and explain what you’re doing. Show them the receipts and guide them through the process. Also, you can play shop with them and introduce fake money into the game. Your kids will likely enjoy all of these activities, and they’ll also grasp the idea of how money works sooner rather than later.
Discuss financial matters openly
Open communication and discussion are essential in family relationships. Don’t shy away from talking about money with your children. After all, we deal with money multiple times a day. Children are naturally curious and enjoy learning about different things. Show them the coins and cash and make it into a game when they’re younger. As they’re growing up, you can expand on financial aspects. Talk to them about household expenses, their allowances, saving, and budgeting.
Use every opportunity to discuss money management
You can use many situations to discuss money management with your kids – from everyday transactions to more specific circumstances. Don’t hesitate to include your children as active participants in the following events:
- daily shopping
- getting schools supplies – talk to your kids about the budget for this occasion, make a list together, and compare prices
- relocation – moving to a new home means setting the budget for this situation; and although your kids might be too young to discuss different ways to estimate the cost of the move, include them in the process
- buying items for furnishing and decorating the kid’s room
- saving for short and long-term goals (from purchasing a new toy to family trips)
Set an example
As we’ve mentioned before, children are naturally inquisitive. Even if you don’t teach them about money management, they’ll likely observe your behavior and follow suit. Therefore, it’s imperative to be a good role model. Let your kids see you have sound spending habits and make intelligent saving choices. That way, you’ll set an example your kids will be glad to follow.
Teaching kids about money management – saving, budgeting, and investing
Financial literacy is a combination of many skills. It includes being careful about your spending habits and learning how to save money, decide on the budget and stick to it, and learning how to build and grow wealth.
Children will usually see their parents spending money. So it’s essential to show them how you regularly save money, too. Apart from teaching them how to save, this will also teach them about goal-setting, discipline, and delayed gratification. While all of these skills are valuable in terms of money management, they’ll also be useful in many other life situations.
As for budgeting, providing your kids with a limited weekly or monthly allowance is a good idea. That way, they’ll soon get into the habit of tracking their money, monitoring their expenses, and planning their spending. Of course, you can help them with this by offering advice and guidance when necessary.
When it comes to investment, you can set up custodial investment accounts for them and help them understand the concept. To keep your kids interested, you can buy a share in a company they’re interested in – from Disney to Microsoft. Follow the news and developments together and discuss them with your children.
Teach your children that money has to be earned
Of course, when teaching kids about money management, don’t forget to show them where the money comes from. To spend it, you have to earn it first. You can achieve this by creating opportunities for your kids to make some money.
For example, you can ask your kids to do some chores to earn their allowance. Additionally, you can reward them extra for any additional task they choose to perform. Whether you use a piggy bank or a Busykid credit card to do so, it will ensure your kids appreciate the allowance they get. What’s more, they’ll be more careful about how they spend what they earn.
Show your kids the true value of money
By teaching kids about money management, you’re not only making them capable of making sound financial decisions. You’re also shaping their attitudes and views on money and financial status. So, if you are a person who likes to give their money and share, you’ll instill these values in your kids too. Show your kids that keeping up with neighbors and following trends isn’t a worthy goal in itself. On the contrary, the point of making money is to ensure you have a secure and comfortable life and purchase things that are necessary and meaningful. And being able to share your good fortune with others is a blessing.
What are the appropriate money management activities for what age?
Of course, how much you’ll teach your kids will depend on their age and affinity. Some kids take a natural interest in financial affairs and learn quickly, while others take more time. It depends on the child’s temperament and curiosity. Here are some interesting and practical ideas for kids of different ages.
Preschoolers and kindergarteners
- use different jars for spending, saving, and giving – help your kids divide the money they get between these three
- opt for clear jars – that will make it easier for kids to keep track of the money in each jar, and having a visual representation of the process is helpful to younger children
- set short-term saving goals for younger kids – for example, help them save for a new toy; when they have enough, go to the store together, and buy the toy in question
Elementary and middle schoolers
- let them earn their money by doing chores
- opportunity cost – tell them the amount of money they have is limited – for example, if your kid buys this video game, they won’t have money for something else they want
- prevent impulse buying – encourage your kids to wait for a day or two before they buy something
- show them little ways to earn extra money – for example, if you’re moving, they can declutter their room and organize their belongings. When it comes to moving to a new home, experts at Moverstoronto.com say that careful and thoughtful packing is essential for a smooth relocation. Children of this age can declutter their room, and you can help them sell all the items they don’t need or use. That way, they’ll not only earn extra money but also make for more efficient packing and relocation
Teenagers
- there are many useful money-tracking apps your teenagers will love
- include them actively into family financial discussions and decision-making process
- set up a bank account for them
- help them save for college
- teach them how to invest in something they care about
- help them find a summer job to earn extra money (after all, is there any teenager who wouldn’t like to have more).
Final thoughts
As you may see, it’s never too soon to start teaching kids about money management. With your guidance and example, they’ll be able to make smart financial decisions and take good care of their budget when they grow up. Of course, help your children acquire these skills at their own pace and adjust your financial tips to suit their age and possibilities. That way, your kids will grow up to be financially literate, independent, and value important things in life.
