If you’re a parent, teaching kids about money is an essential aspect that you will need to work on throughout their childhood. It definitely will not be taught in just one lesson. There are so many different ways and styles to go about doing it, but the basic tenants hold true – show them responsibility, and then build on it. Here are some basic ways that you can teach your kids about money.
The best thing that you can do to help your child learn about money is to start early. As soon as your child can count, you should start introducing them to money. You can make it fun by showing the designs on the bills, and how the numbers relate. Little kids like playing with pretend money too, and I remember that my kids liked putting pretend money in their purses or wallets even when they were really young. I encouraged lots of imaginative play with toy cash registers and playing store. Not only did this help with their math facts, but it allowed them to practice their money skills. Surprisingly it gave me a glimpse into where they were at in the financial literacy process and allowed me the opportunity to have teaching moments that didn’t seem too “school like”. Board games like monopoly can be an additional opportunity to teach about money topics of property ownership and investing.
Additionally at a young age you should also help them understand the differences between needs and wants. That concept may take a long time for them to really understand (even adults struggle with this). I think the important thing to emphasize when they are young is that spending money involves a choice – you can choose to spend your money or you can choose to save it. This basis of responsibility will go a long way towards teaching them more about money later in life.
Teach By Doing
Another great way to teach kids about money is to let them do it themselves. Giving your child an allowance is a very good training tool. By allowing them a vehicle to earn money, they can start connecting that you earn money by working (i.e. doing chores), and you can show them how they can save money and still have some to spend. We started each of our children on an allowance when they turned two. Then, we set up a money jar system for each of them. One jar was for saving, one was for giving (tithe) and one was for spending. They enjoyed watching the money being placed into each jar, and looked forward to the jars becoming full.
In addition, another way to teach them by doing is to take them to the bank with you when you go, and even open them their own account once you start paying them an allowance. Giving your kids the opportunity to do it themselves will go a long way to teaching them about money.
Finally, if you’re paying bills or balancing your check book, don’t be afraid to show them what you’re doing and go through it. They will need to do it themselves sometime, and it shouldn’t be a scary or secret thing. Teach them as you do it. Some high schools require teens to take a personal finance course where the basics are taught (i.e. opening an account, writing a check, balancing a checkbook, etc.) but that’s not a requirement everywhere.
Share Your Own Values
Finally, make sure that you always share your own values with your children about money. Explain to them the “whys” about why you take specific action. For example, the concept of credit can be hard to understand at first, and your child may not know why you are handing the cashier a card to pay instead of cash. Walk them through the process, and then remind them that you still have to pay the bill, you just do it when the bills come. We’ve also showed our kids the importance of giving to charity and saving for the future and we’ve had lots of discussions around debt and about the dangers of credit card abuse. With our older children we’ve been talking about insurance, investing, and the financial aspects of buying a home and home ownership.