Allowances, first jobs, babysitting cash, birthday money from Grandma – today’s youth have access to money in a way that previous generations may not have. Fortunately, they also have unprecedented access to financial tools and resources that can help them set good habits for life. Here’s a roundup of tips for teaching kids about money.
Here’s a roundup of tips for teaching kids about money:
Start early. When kids can grasp the basic idea of exchanging money for an item or service, you can begin teaching them the importance of saving, says Karen Guy, Business & Marketing Analyst at Cobalt Credit Union. Having children put coins or bills into a piggy bank is a good beginning, she advises, even if the kids don’t understand the reason for it. “A connection is made in their minds between money and saving,” she says. “Then, more complex savings topics can be taught as the child grows.”
For an outline of the next steps to take, see “Kids and money: A 5-step plan to teach kids about budgeting, earning, and saving.”
Set goals. Kids manage their money best when they’re involved and encouraged. One popular method for saving is to create a wish list, with the help of the child, with a dollar amount for each item. Parents can make a deal that they’ll match each dollar the child saves toward one of the items. (See “Reach for the gold with family financial goals,” for more on setting money-related goals with kids.)
Play games. There are plenty of board games, including a kid version of Monopoly, where play money is involved. These games teach children how money works and what it can buy. They can also spark discussions about how money is used in real life.
Make kids into junior money managers. While grocery shopping or budget planning, you can get children more involved by putting them in charge of an activity. For example, you might let them know how much you have to spend on milk, butter, and bread and ask them to pick out the best options.
Be a role model. Children observe your actions, so when you’re planning budgets or discussing spending and savings habits, include kids to make it a family activity, advises Guy. “While more in-depth financial matters can be handled between parents, asking kids for their input on ways to save money or making a game out of finding coupons can be a great learning experience,” she says. “It helps to establish those fundamental money management skills by including kids in the process.” (For more about the importance of modeling good money management, see “Core concepts for teaching kids about money.”)
Cobalt CU offers two great tools for helping kids and teens boost their financial smarts. Check out the Banzai Financial Literacy Program for teens, an interactive tool with 30 scenarios on real-life financial matters and The Dollar Dog Kids Club, for kids 12 and under, a savings account with fun, tangible rewards.
What advice do you have for teaching kids about money? Add it in the comments section below!
Ready to talk with your kids about finances? Download the free Kids and Money Discussion Guide.