Teaching Kids About Money: 7 Age Appropriate Tips
Kids are little sponges; they absorb information constantly. Even when you don't realize they're even paying attention, a lot gets through and stays with them. It's important that what they learn is intentional. Here are some great ways to teach kids the right money lessons from the beginning.
1. Lead & Teach by Example
Throughout their lives, kids will see what you do and process it unconsciously so it's best that they see you making smart choices. Do your best to practice good habits like avoiding impulse buys, having healthy savings, and giving to charity. Also, even when they're young, give a little explanation of what you're doing and why so it sinks in over time.
2. Start with the Basics
When they're toddlers, start by teaching them the names of coins the same way you teach shapes and colors. As they get a little older you can play games with money principles like store. Eventually, that can evolve to Monopoly and you can explain the logic behind each financial decision you make when you play.
3. Involve Them
Let them help you clip coupons. Look up the normal price of the items, then apply the coupon and keep a running count of how much you save. At the store, do the math of which box is cheaper per ounce out loud. They'll learn the value of small choices adding up.
4. Help Them Learn by Doing
Starting young, let them work for money. Calling it commission rather than allowance and paying proportionally to each task promotes the idea that money is earned. Also, have them keep their money in a clear container to watch it grow.
5. Foster Financial Responsibility
It's natural to want to do things for them and buy everything they want but having them spend the money they earn on the things they want is better for them. They learn the real value of money and of saving it. When they get older, they can get a job and open a bank account to save for college.
6. Teach Gratitude & Charity
Teaching kids to be thankful for what they have may be one of the most important lessons they'll ever learn. It will help them to avoid needless spending to have the newest things or compete with others. It also helps foster charitable giving for those who aren't as fortunate.
7. Encourage a Thorough Practical Understanding
All of this is a good foundation, but they need to understand complex concepts like taxes, interest, investment, and credit. When they have jobs, go over their withholdings. When they start a savings account, teach the wonder of compounding. Once they have a checking account teach them to balance their checkbook. Real-world applications are the most important thing for real-world success.
The Value of Connection
Everything they learn from you, they'll connect to their lives someday. The money values you practice and teach will become their own. Connecting every lesson to a tangible real-life example will encourage a tangible real-life understanding. They'll carry these lessons with them forever so make sure they lift them up rather than weigh them down.