Teaching kids good money habits when they’re young is so incredibly important. Often, these habits will remain with them for life and greatly influence their relationship with their finances as they age. We’ve outlined some of our best tips for teaching your children about money below:
- Teach them to save
While saving money is not the easiest of tasks, it is an incredibly important skill to learn, especially early on. To reinforce good saving habits with your kids, help them learn to put some of their “earnings” into a piggy bank. Not only is using the piggy bank fun, it will help them practice the skill of reserving some funds for other purposes. Pro-tip: Involve the kids in picking out their own piggy bank and/or decorating it. This kit by Melissa and Doug is a great craft option to save for a rainy day.
- Take a field trip to a bank
Reinforce the need to save by taking your children to a bank so they can see how the process works. In-person visits often help kids to better understand what they’re learning in the classroom or at home, so a quick little trip to a local bank can be both fun and informative!
- Explain the difference between “wants” vs. “needs”
It’s an unfortunate reality in life that we can’t always get what we want (…darn it!). The sooner kids learn this lesson and also learn to distinguish between items they want (such as toys, a pet, certain items their friends are allowed to have, etc.) and those that they need (clothing, shelter, nutritious food, etc.), the better off they’ll be when they have to manage those priorities later in life.
- Help them learn to give back
Next to that piggy bank, add two additional money jars (mason jars work well) that your children can use to allocate funds to be used for spending and giving back. Despite however much (or little) money they have, it’s good practice to always consider if you can give back to others. Of course, you could always organize a volunteer activity to do with your kids as well.
- Let them help you comparison shop
It may be helpful to teach your kids that they have options when it comes to spending money. The easiest way to help teach this concept is to bring the kids with you to the grocery store (you’ve got this, mom!), and point out the price difference between similar products or items that you usually shop.
- Create a rewards closet
If you have the space in your home, you can create a rewards closet or toybox that your kids can use to “shop from” when they have money to spend. This works well with littler kids as a ways to teach them how to make good decisions and spend wisely. You can stock the rewards closet with fun items such as stickers and craft supplies that you pick up from the dollar store or dollar section at Target. Pro-tip: you can always re-use the prizes from birthday goodie bags, too!
- Leverage videos!
These days, there are any number of online resources and videos you can use to help you teach your children about certain money concepts. Practical Money Skills and Kids Money offer great games and tools kids will love, and of course, there are endless amounts of YouTube videos that can also assist.
For those older children…
- Help them secure their first part-time job
Having a job is a huge responsibility that can do wonders for teaching your kids the value of hard work. When your child is old enough, it may be helpful to assist them in getting a job. This way, when they have earnings of their own, you can always be there to help teach them how to save, understand the components of a paycheck, the impact of taxes, and ultimately, learn the baby steps of financial independence.
- Encourage them to manage a budget
Budgets don’t have to be complicated, and these days, there are so many options for helpful budgeting apps that can make this process much simpler. Help your child set up their first budget and learn the key components of their expenses, goals, and spending habits.
- Build good credit
Teaching your child the importance of having good credit is incredibly valuable. Furthermore, you can help them build good credit by helping them open a checking/savings account, helping them get a secured credit card, or adding them as an authorized user to your card (provided you have good credit history, yourself). Then, teach your child to make routine payments on the card (paying in full each month is a good behavior to make a habit!), track their spending, and use in conjunction with their budget.
What tools and tricks do you use to teach your kids about money? We’d love for you to share them with us!
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