Teaching kids about money is an important part of parenting. Financial literacy is a skill that can be taught at any age and will help children understand the value of money, budgeting, and saving for their future. Teaching kids how to manage their finances can provide them with the knowledge they need to make responsible financial decisions as adults. Here are some practical tips on how to teach kids about money with age-appropriate examples.
How To Teach Kids About Money At Any Age
Money is often viewed as a forbidden topic, but this reluctance to discuss funds leads many to remain financially illiterate. Although it’s understandable that you may want certain matters kept under wraps, there’s no need for your family not to talk openly about fiscal situations.
Talking to your kids about money is an important step in helping them understand how finances work.
But how do you teach kids about money?
Money is an essential part of life and comes with important skills to learn, so although this topic may sound inappropriate for kids, it’s never too early to start teaching them about money.
To make the process easier for you and your children, take advantage of our simple-to-follow steps that can be adapted based on their age level. This will help them become more comfortable managing their finances as they grow older.
Financial Literacy
In the past, only people with a lot of money knew about finances. But now, anyone can learn about money and personal finance with all the technology we have today. Start talking to your kids early about finances so they can be smart with their money. This helps everyone have an equal chance to understand finances, no matter how much money someone has.
Broaden Worldview
Money is a driving force in this world, and having knowledge about it is key to having worldwide awareness.
When we talk about money, it can help us understand the differences between people with a lot of money and people who don’t have much. It is important to talk about this issue because it affects people all around the world.
To raise children who can think globally and have empathy for others, teaching them the basics of money’s function should be your first step.
Prepare for the Future
Being money-savvy is one more essential skill that kids will take with them into their future endeavors.
It teaches independence and is a step on the road to financial independence. And though it seems a long way off, the earlier you teach kids about money, the more confident they will be when it comes time to manage their own finances.
Note: Looking for ways to teach independence? Check out my post on The Best Tips For Raising Independent Kids!
Foster Gratitude
We should all feel grateful for what we have. By teaching children the value of money, we can raise them to be more gracious individuals for all that they have in this world.
This cause helps teach children to be kind and generous. It helps them learn how to give in all parts of life.
15 tips on how to teach kids about money at any age
Uncover 15 actionable steps to help teach your children the essential principles of financial literacy, no matter their age.
1) Model good spending habits
It’s no secret that children learn by imitation. Thus, providing them with a positive example to follow regarding finances is essential for their development and future success. By showing your kids the skills needed to practice good money management, you can instill in them an appreciation of responsible spending habits.
To help your children learn to manage their finances, discuss budgets, share knowledge on sales and discounts, and involve them in the process through active activities.
For instance, take them grocery shopping with you; have them look for the best deal on paper towels or assist you in cutting coupons from the weekly flyer together.
2) Count coins
Learning about different coins is important for learning about money. Use real coins or pretend coins to practice counting and naming the coins.
3) Use play money
Play is an essential part of a child’s learning process, as it helps them to absorb information more easily and apply it practically, all while having fun.
To teach your little ones about money, why not try setting up their own pretend store?
Not only will this give kids the opportunity to practice exchanging goods for payment; but also be a great way to reiterate the concept through frequent play.
4) Try online resources
Playing online games or using apps can not only be entertaining but also extremely advantageous for children of all ages. From counting to money management, these activities are an excellent way to teach the basics of finance while simultaneously keeping them engaged and having fun.
Don’t hesitate to explore some of the numerous online resources that allow your kids to learn more about money in a playful manner!
5) Earn an allowance
Allowances are nothing new- they’re a simple, practical way to educate kids on the power of money. By having your children fulfill manageable tasks and chores in exchange for their regular allowance, you can teach them about the value of money in real terms.
Not only will this help them better understand what it takes to earn an income; but also allow them to appreciate its worth.
6) Start small-scale saving
Kids may not need a savings account at an early age, but it’s still a great idea to begin small-scale saving. A piggy bank, rolling coins, or even a box can be great ways for them to store their money and save up for something they truly desire! Encourage your children to hang onto their pocket change so that one day they can achieve their goal.
7) Talk openly about money
When it comes to money, don’t be secretive. Instead, discuss finances in a family setting and even make small financial choices together!
Nevertheless, just remember that adult worries concerning debt or other monetary issues should not be placed on your children; this can result in them getting overwhelmed with the stress they shouldn’t feel.
8) Encourage smart spending
Motivate sensible spending habits. Talk about steering clear of impulse buys, and inspire your children to bank their money for something they genuinely wish to have instead of something they can purchase on the spot.
9) Teach financial terms
Knowing the lingo is essential in understanding finance, so if you are not familiar with them, then you can feel lost!
To make sure your kids become money-savvy adults, it’s vital to use traditional terms and phrases when discussing finances instead of simplified versions. This will prepare them for future conversations about financial matters.
10) Practice budgets
Budgeting is an essential skill that even some adults don’t take advantage of. Make budgeting a part of everyday life by discussing your own budget while encouraging your children to budget as well.
You could suggest practice budgets, budgeting games, or real-life budgeting of funds.
11) Make a savings account
To help your children become more responsible for their finances, it’s a great idea to open savings accounts in their names.
For younger kids, set up the account together with them at the bank and share stories about why saving is important – this will be even more special when they receive monetary gifts!
As they grow older, you can also provide them with debit cards along with chequing accounts while still teaching them how to monitor spending digitally. Helping people with their finances helps them feel like they can take control of their own goals.
12) Give responsibility with stored-value cards
Unsure if your child is mature enough for the responsibility of handling a debit card? Consider starting with a stored-value card, which functions much like a gift card.
You can give your child money, like an allowance. This is a good way to help them learn how to manage money without going over their limit. It also helps them save up money.
Stored-value cards can also stimulate smart financial tracking habits: when it’s gone from their account, it’s gone!
13) Show them how money grows
While it’s essential to show your children the value of saving, it’s just as important to discuss how their money can grow. Talk about investments and explain interest rates, in addition to introducing them to tax-free savings accounts.
Although these ideas may seem complex for older children and teenagers, they should not be neglected until adulthood! If taught early on, financial literacy will become second nature even before entering college or embarking upon a career.
14) Talk about charity
Money management is an important lesson we must teach our children, but even more essential is teaching the value of generosity.
Demonstrate charitable behavior in your own life and emphasize that giving back to those who are less fortunate helps build a stronger community. Showing your kids how to be generous doesn’t have to be a big gesture—even small acts of kindness can make all the difference!
Encouraging compassion through charity work will help develop their sense of social responsibility from an early age, setting them up for success as they grow into adulthood.
15) Don’t overwhelm them!
It’s never too late to learn about money and how to manage it! It’s important for kids of all ages to know the basics. Teach them at their level so they can understand. Give them lessons that are easy, then teach them harder stuff.
This way, they will learn everything they need to know about managing money.
Additional resources on teaching children life skills
- How To Help Your Child Develop Fine Motor Skills
- Helping To Develop Strong Coping Skills For Kids
- Age Appropriate Chores for Kids: Teaching Valuable Life Skills
- 8 Valuable Life Skills Every Child Needs to Know Before They Turn 18
- 4 Life Skills to Teach Toddlers
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