When you tell your kids you can't buy a toy they want, they might say things like, "Swipe your credit card" or "Go to the bank and get some money." Most of the time, we don't talk to kids about money until they are older because they don't understand the bigger financial issues that go into these kinds of decisions. But kids can learn quickly how money works, what it's worth, and what kinds of decisions people have to make.
Children learn by watching and listening, so the more you talk to them about money and show them how it fits into their lives, the better. You can teach your kids about money by turning everyday topics or activities into lessons about money. These 11 tips will help you teach your kids about money.
11 Ways to Teach Your Kids About Money
1. Talk about money early on.
Even very young children can understand the difference between more and less. As soon as your kids can count, you can teach them about money. Have them count their change to get them used to money. Have them make two piles of coins and tell you which one has more and which has less. When they know how much each coin is worth, the same game gets harder: Which pile of change is worth more? In the future, you'll be able to build on these basic skills.
You can also teach young kids to read price tags at the grocery store and explain what it means when something is "on sale." You can say why you're going to a discount store or buying a lot of the same thing. As they get older, you can even have them figure out which item is the best deal by figuring out the price per unit.
2. Make lessons fit the age of your child
Preschoolers and toddlers can learn about money by doing simple things like sorting coins. By the third or fourth grade, kids are ready to talk about more complicated money issues like making a budget and planning how to save for a family trip. As your kids get older, you can talk to them about how their choices affect how much money your family has. For example, if your kids leave a room's lights on when they don't need to, you can tell them that it makes the electricity bill more expensive. This isn't to make them feel bad, but to teach them that small choices can have a big effect on how much money you spend or save.
3. Give your kids a pocket money.
Giving kids an allowance helps them learn how to deal with money. It's better to mess up when you're 12 and only have $50 than when you're 35 and have $50,000. But you should give your child an amount of money that is right for his or her age and ability to handle money. A 10-year-old, for example, could get $10 a month. Since you want your kids to learn from their mistakes, try letting them decide how to spend their allowance.
Of course, you can trade the money you give them for things like making their beds, folding their towels, or helping with other family tasks. Having these responsibilities and getting paid for them is a great way to help your child get ready for a job.
4. Tell your kids to get jobs so they can earn money.
When I was 9, I sold avocados to my neighbors in my front yard. It was the first time I tried to make money on my own. It's a great way to teach your child the value of hard work to make these kinds of money-making opportunities for them or to help them find them. It also helps get rid of the idea that they can do whatever they want.
Help your kids make a list of jobs or responsibilities they could do for money. Make sure they can do the jobs and will help your kids learn and grow. For younger kids, these jobs can be more about doing everyday things like getting dressed for preschool, making their bed, or doing their homework. Older kids might be able to help their neighbors with things like yard work, babysitting, or other helpful tasks.
5. Get your kids involved in buying big things for the family.
When your family wants to buy something big, like a house, a car, or kitchen appliances, make sure your kids are involved. You can show them how important it is to do research before making a big purchase, what goes into making a decision, and how to compare products and prices. When you're ready to make the purchase, bring your kids with you.
6. Let your children make spending decisions
Let's say that your kids get money as a gift or from a job. Should you let them spend it all the next time you go shopping, or should you tell them to save it for a rainy day? It's important to let your kids choose what they want to buy with their own money. This will help them understand why it's important to save money. Your kids might choose things that are too expensive for them to buy. Don't save your kids by giving them more money. Instead, help them understand that if they don't have enough money, they will have to wait until they have saved up for the item they want. If they don't have enough money, they can choose something cheaper.
7. Explain needs versus wants
Even though it's good to let your kids buy things they want, it's important to teach them the difference between things they need and things they want. This is what we call budget planning for our adult clients. But the same idea—asking yourself if a purchase is a must-have or a nice-to-have—is important for kids, too, because it will help them make better decisions with their own money in the future.
For instance, if you go to the store with your kids, they might want that $35 box of Legos. Tell them what else $35 will get them. Show your kids how much things cost around the house. Would you rather have the Legos, a ticket to the zoo, or even a bag of groceries? The more they know about how much things cost, the better they can decide which things are more important to them and which ones they can do without.
8. Teach your kids to be generous.
Help your kids realize that it's better to give than to get. Whether you teach your kids to give to friends in need or to a charity, this is an important lesson that will shape their views in the future.
Have your kids choose a cause they care about and decide how much money they want to donate to a charity that works on that issue. Then, they can save some of their monthly allowance or money from their job toward their goal of giving to charity. This shows both how important it is to save and how much fun it is to give.
9. Teach your kids how to wait for what they want.
This one is easy to teach to even the youngest kids. I remember going to Target or Toys R Us with my kids and telling them we were "just looking." If you tell your kids the same thing over and over, they won't feel like they're missing out. They will learn that toys only come on birthdays and other special days, and they won't ask for them every time you go shopping. The "buy now, pay later" mentality that can lead to credit card debt can also be stopped by teaching kids about delayed gratification.
Remind them that if they wait, good things will happen. For example, you can heat up a frozen pizza from the store in the microwave and then make a homemade pizza with all the toppings your kids love. Even though making pizza at home takes longer, it tastes much better.
10. Help your kids keep track of what they spend.
One of the most important things a child can do to get better at managing money is to find out where their money is going. By having kids keep track of their spending, you can teach them to be aware of how much they save and spend each month. This will make it easier for them to stick to a budget in the future.
Have your kids keep track of where their money goes each month using a spreadsheet or a notebook. They can keep track of how much they spend and on what, as well as how much they have saved for big purchases or to give away. We give our clients and their children a worksheet that helps them figure out how much they spend each month. You can give each of your kids a file or a special place to keep their bills and receipts.
11. Teach your kids how to use credit cards and how to make a budget.
Teenagers should learn about credit cards and budgeting before they go to college. This will help them avoid getting into trouble with credit card debt. College students often start getting credit card applications in the mail or by email that have already been approved. Teach your kids how these cards work so that doesn't happen. The way you pay your bill, what happens if you don't, your credit score, and what to do if you lose your credit card are all important things to talk about. You might want to give your kids debit cards instead of credit cards to help them learn how to budget and not spend more than they have in their bank accounts.
First steps
Even though everyone wants their kids to have good financial lives in the future, parents often forget to teach their kids about money. With these simple activities, every parent can help build a strong financial foundation for their kids and teach them good money habits so that they can become adults who are good with money.
No comments:
Post a Comment