Financial responsibility starts from a young age. Kids don’t come with a concept of money, which is why your preschooler may be asking for everything they see on the television or every toy they come across in the store. You’ve probably heard the phrase “money doesn’t grow on trees” over and over, and it might even be something you tell your own children. Money matters and children benefit from learning how to manage their money.
While it’s not practical to give your five-year-old a credit card or teach them everything there is to know about money, there are some age-appropriate ways to bring money into the conversation. Here are some smart ways to teach your kids about money in a way they’ll understand so you can set them up for a successful and responsible future.
Talk With Them About Where Money Comes From
Again, money doesn’t grow on trees. Money doesn’t just come from your wallet, either. It comes from hard work and financial responsibility. It’s a relatively simple concept for children to understand — when you work, you get paid a certain amount of money. You usually don’t earn money by being idle unless you’ve invested it or are getting passive income.
Frequently remind your children of the relationship between work and money. That way, they know exactly where it comes from. Additionally, tell them that the money you earn has to cover your needs, like food, housing and clothes.
Use a Clear Jar for Their Savings
Piggy banks are a great way for children to save money. Each time they earn money or receive some for their birthday or a holiday, they can put it in the piggy bank. However, most piggy banks aren’t clear, and kids can see how much money they have.
Instead, opt for a clear piggy bank or glass jar. They can visually see the money grow, and you can both celebrate their savings! This also helps avoid impulse buys — they might have something they want at the moment, but when they take out the money, your kids can see that they’re losing some.
Play Games or Read Books That Involve Money
Board games are an excellent way to teach kids about money without having to use real money. Monopoly and Life are two of the most popular games that involve play money. Your kids can learn how to save and budget their money to buy other items to make a profit.
Reading books about money is another great teaching opportunity for your kids. Books can present a visual and tangible way to learn about money. Find some age-appropriate books for your kids that tell a story about money and read it with your kids.
Bring Your Child to the Store
Though many parents may choose to leave their children at home while they shop, it can be beneficial for their financial experience to come with you to the store. You don’t have to bring them every time, but once in a while, invite them to go shopping with you so they can learn how to spend money wisely.
Before the trip, tell your child your budget and have them help you decide what to buy. They may realize it’s more cost-effective to purchase one brand over the other or that it’s better to spend money on nutritious foods. Even grade-schoolers can participate by clipping coupons or adding up the costs of items.
Set a Good Example With Your Finances
What you do with your money matters. Setting a good example for your children to follow is one of the best ways to encourage financial stability and responsibility. Your kids look up to you for nearly everything, and finances aren’t out of the question.
Be open and honest with your purchases, have regular financial meetings with your partner and even your children. Show your children that spending or making money isn’t the key to happiness, too. If you are unstable with your finances, get those in check and teach your children the consequences of poor money management.
Create Earning Opportunities
Allowances aren’t necessary to teach your children about money, but they help your children make their own financial decisions at a low risk to you. However, they should earn the allowance you give them through things like chores or good grades.
Children will learn that they must earn their money. If they want to be paid, they have to complete the tasks given. The chores should be outside of your expectations, like cleaning up their room every day or caring for a younger sibling, which is non-negotiable.
Teach Them About Giving, Saving and Spending
These three principles — giving, saving and spending — are what financial responsibility is founded on, and they’re worth teaching your children. Saving and spending are the most basic of these, and they’re likely what children experience most often.
However, giving is just as essential since you can teach your children the importance of helping others and making an impact. Encourage your children to separate their money into those three categories. This can help them begin to learn how to budget.
These Money Tips for Your Kids Are Priceless
As you navigate through teachable money moments, keep these tips in mind. The sooner your kids can learn how to manage their finances, the better off they’ll be in the future.