Ways to Teach Your Kids About Money
It's always best to have open and honest conversations with your children regarding your financial situation. However, it's also important to be conscious of their age and understanding of the matter. Children under the age of six generally don't grasp the concept of money very easily. Find a way of explaining to them your current financial status without making them feel guilty or worrisome. They just need to know that money is tight right now, and as a family everyone will commit to a budget, making their support and understanding essential.
Here are some tips on ways to teach your kids about money:
- Learn good money management skills yourself. One of the best ways to teach children about money is to lead by example. Parents set the foundation for their children's learning, and kids are more likely to become good money managers when parents show financial responsibility.
- Give kids an allowance. There are differing opinions on whether or not to give children an allowance. While some may consider it spoiling kids, giving children a regular income can be a great opportunity to teach them the basics of earning, spending, and saving. Parents can also use an allowance to help children learn the difference between wants and needs.
- Have your young children cut coupons with you. It will make them feel like they're helping out, and when you go grocery shopping you can show them how much they helped you save.
- Teach your children as young as three about television ads, and how what is portrayed in the advertisement might not be reality.
- Over the weekend you can teach your children about the responsibilities of earning money by giving them some simple household chores. While doing so show them the value of money. If you just hand a child $5 a week and have them do chores they may not fully understand the value of money. Instead, for every dish they wash they earn a nickel. That way they will understand that a nickel has a certain value.
- Teach them how to save. Set them up with a Junior Bank account or a CD that they cannot touch for a few years. Let them watch their money grow.
- Instead of receiving toys for holidays and birthdays have close relatives give savings bonds or money to your children. Set these aside in different accounts, such as "the car fund" or "the college fund" for when your children are older.
- Teach your older children how to comparison shop. As early as the third grade children start to pick up on costs and how they relate to purchases. If nothing else it will keep their minds preoccupied while you're pushing a shopping cart around.
- Talk to your children about simple ways to save money around the house. Saving on heating and electricity is very important. Teach your children to turn the light off after leaving a room, or not to leave the water running while brushing their teeth.
- Don't reward your children's good behavior with money. Instead reward them with cost-effective items. For example, if your child did well in school all week, on Friday take them to the library to pick out some books or a movie, or allow them to stay up late on one weekend night.
- When your children are between 11 and 15 allow them to work simple jobs to teach them about responsibilities such as a paper route or babysitting. It will give them a sense of maturity and accomplishment when they have earned the money.
- One way to ensure they're financially fit in the future is to teach your children about IRAs. They can start putting money away as early as they'd like to help them in years of retirement. Most IRAs don't have a minimum amount of money required for deposit each month so your child can contribute to it as they accumulate money.
- When your children are juniors in high school and possibly planning for college talk to them about student loans. By now your child should understand how to use a checkbook and should understand interest rates. Soon they will be receiving credit card offers in the mail so be sure to go over with them in detail what each credit card has to offer and what all of the terms mean. If you are unsure about the terms reach out to your local NFCC Member Agency to see if they have any workshops you can attend with your children in order to learn more about credit.
- Teach your high school students about rent/mortgage, and the problems that occur after missing a payment.
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