Money is part of everyone’s life. You need money to purchase necessary items like groceries and clothing, and you need it to pay bills to survive. Some people are great at finances—others, not so much. That’s why you must teach your kids valuable lessons about money from a young age so they can adequately manage their finances well into adulthood.
You don’t want to risk allowing your child to learn inadequate money management from someone else, so that’s why you need to teach your kids about money. Financial skills are essential to navigate life, so here are some realistic ways to teach your kids about money so they’re set for the future.
Teach Them the Value of Money
First of all, you should teach your kids about the value of money. If you hand a young child a penny, nickel and dime, they’ll likely choose the larger coin, which is the nickel. However, the nickel is not the most valuable.
You can teach your children the names of coins and how much they’re worth. They’ll be able to recognize coins after repetition of showing and teaching them their values.
Talk Openly about Family Monetary Decisions
You shouldn’t have to hide monetary decisions from your children. If you’re paying bills or have a significant expense coming up, explain to your children that you have to save money for it and might have to budget, which means no more unnecessary items for a short amount of time.
Let them understand that things cost money and that their food, clothes, and toys don’t magically show up at your house. Ever since they were born, you’ve had to carefully save money to support them. Explain how you pay for things so they know how much everything costs.
Use a Clear Jar for Their Savings
Piggy banks are great ways for children to save money they get for birthdays, holidays, or if they find a coin on the sidewalk. They love putting their earnings into a piggy bank, but unless you dump all of the money out, they can’t visually see how much they have saved.
When kids can visually see their monetary growth, they’ll learn and grasp the concept of money even better. Each time they add to the jar, they can see the growth and be excited that they’re saving money!
Play Board Games That Involve Money
What’s more fun than a family game night? Games like Monopoly and The Game of Life teach valuable money skills. Although the money is fake, your children can learn what it’s like to spend money, be in debt, and invest their money.
Your kids can get a sense of how the world of money works. They can decide what they really need in life, which leads to better spending habits in the future.
Talk about Spending, Saving and Giving
When your child earns money, create three different envelopes for them—one for spending, saving, and giving. Part of teaching them about money is teaching them how to organize their money.
Each time they receive money, have them split it into either equal parts or an agreed percentage for each category. Then, they can choose what to do with the funds in each category. For example, if they have a friend in need, they can use the “giving” money for their friend.
Let Them Pay for Something They Want
Kids always want things, whether it be a new video game or a dollhouse. These items aren’t something they need, so if they want it, allow them to save up and pay for it themselves. They’ll soon realize that it takes a lot of saving to pay for an item.
If they want the item badly enough, they will take the time to save their money, especially if you refuse to give in and purchase it for them.
Encourage Teens to Get a Job
There are plenty of opportunities for teenagers to get a job. As your children get to that age, they can begin doing more work. They will further understand that it takes hard work to earn a small amount of money and appreciate how much you work to make money for everyday expenses.
Start with a small job, like babysitting or mowing lawns. Ask around the neighborhood what kinds of work people have that they can regularly pay your teen money to do. If you have older teenagers, help them search for a part-time job.
Use Everyday Context to Teach
Money is involved in everyday life. You likely spend money every day, whether it’s for groceries, spending at a restaurant, paying bills, and even for taxes. Each time you pull out cash or your credit or debit card, it’s a prime opportunity to teach your kids about money.
Let them help you count out money for a purchase, or have them help you fill out a form online when you make an online purchase. Additionally, teach them about checks and how to write them. The more often they can participate in spending, the more skills you’ll instill into them.
It’s Never Too Early to Teach Kids about Money
You’re better off being realistic about money with your children from a young age than have them grow up and be misinformed about the world of money. Help them make wise financial decisions so you can be confident in their future money habits.