Why is it that kids need to learn about money? It’s because money is what makes the world go around. It’s the reason your reading this post and it’s the same reason I’m writing it. Teaching your kids how manage and save their money while they are young can lead to lifetime habits that can help your child succeed.
Most people agree that kids should learn about money early, but still many parents feel that they don’t want their kids “worrying” about money at such a young age. They should be carefree and not have to worry about money until after college. The problem is, most of your child’s habits will be developed by the time they graduate college. Not only that, but understanding how money works and it’s importance in every day life can make the difference between your child seeking a results-oriented degree or another one of those liberal arts degrees that can never provide for a family. Okay, I’m teasing about the liberal arts degree, well kinda anyway.
If you want your kids to be money savvy as they grow up you need to fuel a desire for money in them early. It can help to show them what money can provide, and how money can be used to help other people and take care of families. You can also incentivize them by showing some of the really cool things that money can buy. If done properly, you can motivate your child to want to be a good money manager.
By starting young, your child will be able to ask a lot of questions and it will be easier for them to make sense out of how everything works. Consider doing things like giving an allowance. But make them earn it. Also, help them manage the money they earn. Don’t let them simply go to the toy store and spend it. Tell them that they will need some of that money when they need to pay for school, or buy a car when they are in high school. Have them give some money to charity, but have them do it in person. Take them to a food bank or someplace where they can see the suffering that others without means to money face. It will make them want to help others as well as help them understand more about money.
Most importantly, be honest with your kids when it comes to money. Tell them your monetary values and help them build values of their own. When planning vacations or doing other things that cost money, make sure they understand that a sacrifice has been made to achieve the fun they are having. Being straightforward, starting early, and giving your child a consistent understanding and demonstration of money management is perhaps the best way to teach them.
What Others Are Saying About Teaching Kids About Money
We like to look around on the web to see what other sites have to say about each topic we write on. Here are some other interesting things we learned.
First, we ran across this post from Good Housekeeping. They wrote a long, seven page article about managing money and there was a small amount of it focused on how kids can manage money. Here is an excerpt from their article:
Three musts for teaching your child the value of cold hard cash
- Give them some! If kids don’t have their own money, they can’t learn responsibility. Children as young as 8 can handle a small allowance ($1 or $2 per week), and tweens can manage more ($10-plus).
- Teach them budgeting 101. Have kids write down how much they spend during a week. Point out that when you spend a little at a time, you may not have enough saved to buy a bigger, more coveted item.
- Give incentives for saving. Set a rule that a certain amount of allowance (say, a third) must be put in the bank. Explain interest, and if you can, offer “matching funds” if your child’s account reaches a certain level.
And Free Financial Advice, another site that offers lots of money advice, had the following to say about teaching your kids to manage their money:
- Teach your child that saving today means they’ll have money to spend in the future for something they really want or need. Have them think of something they want to buy in the future (like a bike or even a car) and let them visualize their savings as something they really want.
- Encourage your kids to save by matching their savings. Match them dollar for dollar to give them encouragement. Another encouragement would be to pay them interest (since the banks rates are so low) on a monthly basis, and then show them how their savings have grown.
- Encourage your children to earn extra money. Offer to pay for some one-time household chores or offer an allowance, then encourage them to save the money.
You can find the rest of this article at How to teach your kids to save money.
Perhaps you have something that has worked for you and your kids. Please share your ideas below.