How To Teach Your Child About Money
As parents, we want the best for our kids. This doesn’t have to mean buying them the newest toys or the smartest clothes. Mostly it means making sure that they are safe and secure. We want to give our children a solid foundation that will stand them in good stead for the rest of their life.
A working knowledge of how to use money is essential if we want our kids to do well in life. As parents, it’s so important that we are teaching financial literacy. We need to be having conversations about money, even if it feels difficult or awkward. Your children are probably very eager to learn.
Teaching Young Kids About Money
Really young children can learn the basics of saving and using money.
Using A Money Jar
Using a money jar that is see-through will allow young kids to see money slowly building up. This kind of visual aid is really important for young learners. You can talk to your child about the value of different coins. Make them feel excited about the jar filling, and tell them what they could buy with the money.
Setting A Good Example
Your kids are always watching and learning. If you are constantly using credit cards to buy goods and services, they will take this in. If you are always arguing with your partner about money, they will feel that money causes emotional friction. Set a good example, and your children will absorb positive money lessons.
Teaching Them About Buying
Just telling your young child how much something costs won't mean much to them. If you give them a few dollars, take them to the store, and ask them to physically hand the money over, they are more likely to learn in a concrete way.
As Your Kids Get Older
As your children get older, you need to know how to support them with money.
Showing Opportunity Cost
As your kids grow up, they need to be able to make decisions. Telling them that if they buy a new video game they won’t be able to afford a new pair of sneakers will help them to understand the impact of their choices.
If you give an allowance, your kids won’t learn the value of money. Instead, give them commissions based on housework and other chores. If they take out the trash or mow the lawn, give your kids money. Teaching your children that money is earned is a great way to support their learning.
Not Indulging In Impulse Buys
Kids can be very persuasive when they see a shiny new dress or toy. Instead of indulging in impulse buys, let them save and buy their own. Encourage them to wait for 24 hours if they want to make a big purchase. This way they will know if it’s something they really want or need.
You can also teach your kids about giving back. You could let them pick their favorite charity, or even someone they know who needs help. They will realize that giving affects the person receiving, but also positively impacts the giver.
Teaching Teenagers About Money
As your kids get older, you can go into more depth about money education.
Teaching Them To Be Content
Your teenagers probably spend a good chunk of their time staring at screens. This means they are constantly seeing images of people living lavish lifestyles and portraying the image of success. These highlights reels of people's lives usually don’t tell the whole picture. They can easily lead to the comparison trap.
Contentment comes when we appreciate what we have. Your kids can have a birthday party without you having to spend your retirement fund. They can have a car that gets them around, without needing the latest model.
Giving Them Responsibility
When your kids become teenagers, you can consider opening a bank account for them. This will take their money management to another level. You can get prepaid debit cards for kids to learn about money. This way they will learn the skills for managing heftier accounts when they get older.
Getting Them To Save For College
Now is the perfect time for your teenager to start saving for college. If they plan on working a summer job make sure they tuck away some of their earnings. If they feel like they are contributing to their own education this could give them a lot of self-esteem.
Teaching Them To Stay Away From Loans
Student loans might seem like a good idea but can lead to a debt spiral that is nearly impossible to get out of. Talk to your kids about alternatives to loans. This could include going to community college, working part-time, or applying for scholarships.
Teaching Them The Danger Of Credit Cards
When your kid turns 18, they will be hounded by credit card companies. If you don’t teach them why getting in debt is a bad idea, they could end up another victim of the predatory banking system.
Getting Them On A Budget
Your teenager is probably glued to their device all day. Encourage them to download a simple budgeting app. This will help them to understand the importance of having a plan. They will be able to clearly see their incomings and outgoings.
Talking To Them About Compound Interest
The earlier your kid starts investing, the better. Compound interest is fairly easy to understand, but it works like magic. Introduce your kid to the idea as soon as possible and they can get a great headstart when it comes to investing in their future.
Helping Them Figure Out How To Earn Money
Teenagers have a lot of free time. If they really want some extra cash, help them to find a job. You could even help them to become an entrepreneur. It’s easier than ever to start your own business and start turning a tidy profit.
In this article, we talked about how to support kids with money. For young children, this can be as simple as getting a money jar. For older children, this can mean getting them a bank account and helping them to find a job.
This post was written by
Ellie Lott - from Young and the Invested