5 Simple Ways to Teach Kids about Money
Money - so much of our adult lives revolve around making it, spending it, saving it…So naturally, it’s important to teach our kids about finances when they’re very young. And while money is such an important subject for little ones to grasp, it doesn’t have to be boring or stressful to learn about.
Here are a few activities you can do with your kids to teach them about finances, while still having fun!
Gift your kids a piggy bank
Here’s an easy one! Buy your kids a piggy bank or jar to store their savings in.
A piggy bank is a great opportunity to explain the importance of saving, financial strategy and delayed gratification. A savings jar helps children learn that if you save your money now, with patience, you can reap a reward later. Saving money in a piggy bank encourages kids to exercise self-control by not having all their funds immediately at their disposal, and to plan ahead for how to manage saved money.
A piggy bank or savings jar is also helpful in teaching very young children the monetary value of each coin and bill, and encouraging kids who are a bit older to find ways to earn extra money to save via household chores, yard sales and more.
Allowance
If your household finances allow it, try giving your kids an allowance. An allowance helps teach kids how to be responsible for their own money and how its used, as well as the benefits and consequences of financial decisions. Giving out an allowance is also a great way to teach children independence, and accountability for the outcomes of how they choose to spend or save their money.
One method of distributing allowance involves dividing what kids receive into three separate categories (or jars/piggy banks): save, spend, share. The save jar is where your kid will divide out a portion of his or her allowance money to save. The spend bank is where your kid will store allowance money they intend on using for purchases. And finally, the share jar will be for the portion of their allowance allotted for a special cause of their or your family’s choice.
Donate to a charity
While many charitable organizations can benefit from your time, donating funds can often make a huge difference in the lives of those they assist. It doesn’t hurt that this also presents a lesson in empathy, compassion and being grateful for what we already have.
Have your child choose a cause - your avid reader may want to donate to an organization that buys books for underfunded schools, and your dog lover may want to donate money to an animal shelter. What better way to teach kids that while money can be used to fund and maintain a lifestyle, it can also be used to make the world a better place for those in need?
Search for the best deal
Got a shopping trip planned? Bring the kids along to help hunt for savings by comparison shopping.
Have your child observe as you weed through online reviews and ratings for a desired item, and let them form opinions on which version of the item offers the best quality. Explain to your child how reading product reviews can help prevent making regrettable purchases and wasting money.
Teach your children that price is also an important part of deciding which item to purchase. Explain how you save money that can be used for other things when you choose to purchase desired items on sale.
It’s also a good idea to have your kids weigh in on the quality of brand-name items vs generic items, and if the cheaper price of generic items outweighs the quality of brand-name items in importance.
Stretching a dollar without sacrificing quality is an invaluable skill, regardless of your financial status.
Teach them how to create a budget
Next time you sit down to do the bill paying or look over the family budget, include your children! Talking about how money is used in your household is a great way to build healthy financial habits in your kids from a young age.
An easy way to start teaching budgeting to kids is by having them help plan grocery shopping trips. Allow them to help create the list of items you need at home and hunt for the best prices according to store discounts and coupons. Have them tag along on the shopping trip and help you stick to the list and stay within an allotted budget for the groceries.
As they get the hang of small budgeting activities, have your kids create their own short and long-term financial goals to work towards, and map out their needs vs their wants. Help them create a plan for reaching these goals and keep it in a visible place, so they have a reminder of why they should save for what they really want, and not spend impulsively.
Below are some additional resources on teaching kids about money:
Teaching Kids About Money: An Age-by-Age Guide