How to Teach Kids About Money at Every Age
Money can be a complicated subject to grasp, especially for children. According to the Chase Slate 2018 Credit Outlook, 56 percent of parents have talked to their children about money. Here are a few tips for teaching your kids about money at every age.
Preschool
Teach the Basics
Eight out of 10 parents say it’s never too early to teach kids how to manage money according to the Chase Slate 2018 Credit Outlook. For children in preschool, the first steps can be helping them grasp the very simple basics of money. For example, teach youngsters that people buy things with money. If they want something, let them know if costs money.
Pretend Play
A great way to teach the basics of money is through pretend play. Play store with your child using a toy cash register, pretend money and credit cards. Take turns purchasing items and paying for them with the toy money.
Small Purchases
Make a teachable moment by letting your child make a small purchase at the store with her money. If your child receives money for her birthday, let her choose something small that she would like to purchase. Make sure you tell her how much the item costs and how much money she can spend. If she chooses a large item at the store but doesn’t have enough money, let her know she doesn’t have quite enough for that item. This helps her learn that certain items cost more than other items.
Introduce a Piggy Bank
The toddler years are also a great time to introduce kids to a piggy bank. Saving their coins from an early age will teach them that coins add up, and it will help them form a habit of saving.
Elementary and Middle School
Open a Kid-Friendly Savings Account
Children in elementary school are the perfect age to open a savings account. Many banks offer special dual savings accounts that are ideal for teaching your child how to save without giving him the freedom of his own account. Take your child to the bank with you to set up the account and visit the bank every month to make deposits. He will feel a sense of accomplishment when his funds start to add up, and he will start to take responsibility for his own money.
Give an Allowance
Giving an allowance is a great way to teach children the value of their time and money. Give your children a list of chores to perform every week. If they do all of their chores, pay them a previously agreed upon amount of money. If they don’t complete the chores, they don’t get paid. This will teach them the value of hard work and that money must be earned, not given.
Be a Good Financial Role Model
Your children watch you and your spending habits from a young age. They see you paying bills, buying groceries and spending money on day-to-day items. If you make bad financial decisions like wasteful spending or paying bills late, your children are likely to notice and model your behavior. Do your best to be a positive financial role model in their lives.
High School
Get Their First Job
High school is typically the age where teenagers get their first jobs. Telling your teen about the value of a dollar is not as effective as their working to earn a dollar. Most teens will grow an appreciation for the money they have earned as soon as they receive their first paycheck. Help them determine what they need to spend their money on and what they should put back into savings. Do they need money to put gas in their car, extra spending money or should they put it all in savings? If they have something in particular they are saving for, help them put together a plan of how much they will have to save from each paycheck to get it.
Start Saving for College
It’s never too early for teens to start contributing to a college fund. Have your teenagers set back a certain amount of money each month to go toward their education. They will thank you in a few years when they have funds to help with their future.
Explain Bills
Most kids know their parents pay bills every month, but do they understand how much those bills cost and how important it is to pay them on time? The next time you pay your monthly bills, walk your teen through it with you. Let him know how much you pay for the electric bills, your mortgage and groceries. This will give him a little bit of perspective on what it takes to run a household.
College
Share Your Mistakes
It’s important to be open and honest with your kids about finances. Tell them about mistakes you’ve made with money in the past. Warn them about credit card interest, wasteful spending and going into debt. Your personal experiences can teach them what not to do once they are in charge of their own finances.
Teach Them About Student Loans
According to Student Loan Hero, the average student loan debt for Class of 2017 graduates was $39,400, which was up 6 percent from the previous year, and Americans owe about $1.48 trillion in student loan debt. Before enrolling your child in college, teach her how student loans work, as well as what student loan debt is. If she has hopes to attend a certain university, look up the tuition and room and board costs with her. Explain how long it would take to pay off all of the debt she would take out. Then let her decide whether the debt is worth it to her. Being completely transparent will prevent her from making a decision blindly that will affect her financial future for many years to come.
Regan Lyons is a freelance writer who lives in St. Joseph, MO, with her husband and 4-year-old daughter.