Good Money Habits for Kids
We all can agree that a strong financial education can help maximize our future opportunities. Yet, for most of us, that education generally comes in the form of personal experience or trial and error. Unfortunately, schools don’t cover many core financial lessons, including saving, budgeting, paying bills, or even paying taxes. We don’t often learn critical financial lessons until it’s time for us to take them on as adults.
But what if there were other ways to help expedite this experience to our next generation? Whether you are a parent, grandparent, extended family or just a close friend, what can you do to help financially educate the children in your life? Here are our top 5 tips on how to introduce good money habits to kids.
Whether you are a parent, grandparent, extended family or just a close friend, what can you do to help financially educate the children in your life? Here are our top 5 tips on how to introduce good money habits to kids.
1. Make Savings Fun
Get a piggy bank. Creating a physical place for kids to put their loose change, small cash, and other financial allowances will help them understand the act of setting aside money for a later date, instead of having it to spend on a whim. Also, count everything! Together. This not only helps teach early math skills that they’ll have forever, but also creates an activity you can do together. Nothing beats the hands-on experience of managing real money.
2. Introduce Earnings
Starting an allowance is one of the best hands-on tools and age appropriate strategies to introduce kids to earning money and understanding where money comes from. Start with a small (age appropriate) amount for daily, weekly and monthly tasks that the child can complete on their own time. This allows them to understand not only how to earn money, but also how to budget their time and accomplish their financial goals.
3. Financial Field Trips
Take them to the bank with you. Yes, going to the bank without kids seems like an easier task, but allowing them to join you and watch as you fill out a deposit slip, write a check, and engage with the teller can really help establish a baseline for banking and introducing the role banks play in managing money.
4. Begin Budgeting
Understanding how to manage money is one of the greatest lessons children can take with them from childhood through adulthood. Pick an activity like a movie date or ice cream date and write down the price of the activity on a piece of paper. If a toy works better, write down the price of a toy on a piece of paper. Then, show them how much money they need to save before they can afford to buy it. If they receive an allowance, break down how much they need to set aside from their allowance to accomplish their financial goal. This can be both a fun yet helpful way for children to learn more about the value of hard work and saving money.
5. Start The Conversation
Most importantly, start the money conversation early. You can be the most influential figure in a child’s early relationship to money and financial experiences. Children listening to you about how you handle finances can greatly impact them and their own internal dialogue about money. Talking openly about finances removes the mystery and any fear they may have about it and helps them define their own financial self-image. Even if you don’t feel the most qualified to educate children on money-management skills, remember, you know more than they do. Kids don’t need to know how to fill out a 1099 or understand how the Federal Reserve’s policy works, but simply starting the conversation and introducing the basics through every day examples will make a world of difference.
It is never too early to start a discussion about money with children. No matter what age they are, focusing on age-appropriate financial activities that can grow as they do will help them build a strong financial foundation and greater respect for managing their money.
A little knowledge can go a long way when it comes to successfully managing your finances. When you are confidently in control of your money, you can start enjoying your life instead of just saving for it.
Make sure your money is working as hard as you are.
