Teaching Your Kids About Money
It’s back to school, and that got us thinking about… well, school! Ever heard someone say, “Why didn’t they teach us that in school!?” I find this often revolves around money- when we start getting adult responsibilities and we realize we don’t quite know all there is to know about finances!
So, how can you help your own children learn about money in a practical and age-appropriate way? We certainly aren’t going to answer this question in ONE blog post, but I hope to share a few tips that might be useful, along with some great resources to consider for further reading.
Talk about Money:
This may sound really simple, but wherever possible, talk about money in daily situations. For example, if you’re at Walmart and your child asks for that gigantic Lego set that costs $168….. that’s a great time to talk about the cost of things! Open up the conversation around how many hours someone has to work to make that much money. Or, how many of something else you could buy with $168 (for example, groceries, clothing, or gas for your car). It’s important that children start learning about numbers and prices, so they gain an understanding & appreciation for earning & buying. Keep the conversation positive, but realistic. You can also start introducing great vocabulary words like sale, tax, more & less, saving, discount, etc. “Wow- those apples are on sale! That’s a great deal- we will choose those ones today.” At an early age, start introducing the proper terminology for denominations of money. Let them help you count out coins or bills when paying, or chat about the amounts on the screen when paying at a till.
Allowance:
When you find the time is right for your child, introducing the concept of receiving a “paycheck” is important. There are differing opinions on whether this allowance should be “earned” by doing chores. Some believe that working to receive this allowance is key, and if they don’t do their chores for the week, they will not get their allowance that week (or they will receive less). Other families feel that chores/housework is just part of participating in family life, so they don’t assign a price to these jobs. Instead, the allowance is simply given on a determined day each week, regardless of chores done. Whichever method you choose, the purpose should be the same: they receive a weekly amount, so that they can learn the importance of saving, the value of money, and the “reward” of spending it on something you want. This changes slightly as kids get older and they take on a part-time job. However, as parents, YOUR job remains the same- guide them and keep the discussion open.
Teach them to Save:
In an age-appropriate way, teach your child to save some of their money. Whether that’s their allowance, part-time job, or birthday/holiday money, teach them to put some aside. Our instinct at a young age is to spend it. We receive an amount, and we want to spend it all (and spend it now). There are different ideas on how much to save, so you decide what feels right for your family. It might be 10% goes right into a bank account (or piggy bank!), and the rest is yours to spend. This helps young kids especially see that a very small amount is saved each time, and the rest is theirs to spend. This is a great way to start teaching about saving in a positive way! We’ve also seen families with a 1,2,3 system- the 1st part is saved, the 2nd part is given, and the 3rd part is spent. Many families find this system helpful, and instills both a habit of saving & giving. Friends of ours do this with their children’s weekly allowance, and the “giving” portion is set aside to purchase items for a Christmas hamper for a family in need. Whatever method you choose, help create the habit early of saving.
There are so many great tips out there about teaching your children about money, finances, saving, and more! The biggest and most important thing we can leave you with today is to keep the conversation open & positive. Talk about money often, and talk about it in a positive way. Use real-life experiences and activities to chat about financial topics and vocabulary. Help your children be responsible and informed about money- it will provide them with a great start for their future!
Some Recommended Reading:
“The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money”- by Ron Lieber
“Money Still Doesn’t Grow on Trees”- by Neale Godfrey
“Rich Dad, Poor Dad”- by Robert T. Kiyosaki
*These are some books we’ve either read, or been recommended, but we do not necessarily support all the opinions mentioned in these books.
And for kids:
“Three Little Piggy Banks”- by Pamela George (Talks about the 1,2,3 system we mentioned!)
“Little Critter: Just Saving my Money”- by Mercer Myer (our kids personal favourite!)
“The Berenstain Bears’ Trouble with Money”- by Stan & Jan Berenstain
Co-written by Jordan & Crystal Cahill. Crystal has been a teacher since 2010, and Crystal & Jordan are parents of two young children.