As I discussed in my last blog, Why Should I Teach My Kids about Money?, teaching children about money is no different than teaching them other important morals or values; it’s giving them the tools to be successful throughout their life.
I’ve put together a short list of simple suggestions of how to teach your child about money. Depending on your child’s age, these suggestions may look a little bit different.
For example, if your teenager is working and making money, encourage and teach them how to open a bank account rather than using a piggy bank.
Regardless of your child’s age, it is possible for them to learn new money managing habits.
Here are 8 tips to teach your child about money:
#1 – Start early.
Learning good money habits is no different than teaching your kids to read or teaching them a foreign language, the earlier you start the more quicker they learn. However, if you didn’t start early, the best time is to start now, it’s never too early or never too late to get started.
#2 – Involve them in planning to buy something and teach them about budgeting.
Come up with a very specific purposeful item that your child can participate in the planning and budgeting of. Make it something they are excited about–perhaps a family night out, or a trip to Disneyworld. Incorporate them into the planning and saving stages so they can see how you manage your money in order to do fun things.
Don’t let the only time kids see you interact with money is when you spend it.
#3 – Get them a piggy bank.
Piggy banks are a physical place for your child to save their money and acts as a visual reminder to add money into it.
#4 – Use cash.
Children are tactile and tend to learn better when they can see it, feel it and are able to watch their money go when they spend it.
While there is nothing wrong with banking or managing your money digitally, numbers on a screen are hard to comprehend and understand for a child. When they physically part from their money to buy something, it makes them consider their purchasing behaviors even more.
#5 – Open a saving account.
Piggy banks are great teaching tools and a physical reminder to save, but also open a savings account to have a safe place to store larger amounts of money. Opt in for physical, printed statements rather than digital statements at first so your child has something they can see and feel regarding their account.
#6 – Teach them about credit and debt.
To put it simply, children need to learn that they can only spend what they have and if they spend more than what they have it will cost them something. While you don’t necessarily need to create a situation where they are borrowing money from you, take the time to explain to them the concepts of credit and debt.
#7 – Create opportunities for them to earn money.
Depending on the child’s age, create age appropriate opportunities for them to work for money. Allowances are fine but try to tie it some action. When kids learn they need to earn their money, they value it more. Connect their allowance to grades, good behaviour or to bigger out-of-the-ordinary chores like cutting grass or washing the cars.
Try not to award your child with money for simply being a member of the household, reinforce that in order to have money, they need to earn it.
#8 – Encourage them to give.
Teach your child how to become involved in giving and be “other-centered.” Here are some ideas: let them put their money in the basket at church, mail money off to the local SPCA or give lightly-used books or toys to a shelter.
Discuss with your child the types of organizations that are out there and the types of organizations your child may want to give to. Make a list of those organizations and create a pact with your child to give and possibly volunteer with those organizations on a regular basis.
Preparing for the future
Teaching your children how to manage their money is an act of preparing them for the future. With simple steps, children (and adults) of any age can learn how to better manage their money. These may not be the easiest tips to try, but it’s a place to start and hits all the major points of good money management: spend, save, invest and give.
What other money managing tips do you have?