We strive to teach our kids everything from reading and writing to practicing good manners. One area we sometimes neglect is financial education, even though money comes into play at virtually every stage of life. Whether they are asking you to buy them a new toy at the store or preparing to apply to colleges, your children can benefit from your financial knowledge. By helping shape their attitudes toward money now, you’re setting them up to make wiser money management decisions in the future.
Here are some ideas for activities you can use to teach kids about money.
Preschoolers:
Play pretend. Your preschooler may think that pretending to run a store or restaurant with you is just a fun way to spend playtime, but you can use play money to teach them about how money is traded for goods and services.
Clip coupons together. When you sit down to make a shopping list, keep your little one with you. Talk to them about what you’re buying and why, and have them help you cut coupons with their safety scissors. Children learn by watching and listening, and you may be surprised by the questions they ask.
Kindergartners:
Show them how money “grows.” Find a clear jar that your child (or the whole family) can use to save coins and dollar bills. This will help them visualize how money grows when they are intentional about saving. When you and your child agree to spend some of that money on something, have them watch as you remove money from the jar so they can see the amount decrease.
Count together. When making a cash purchase, have your child count the money out with you. This not only helps them practice their numbers, but also teaches them how much different coins and bills are worth.
Answer their questions. Kids like to ask questions, and every answer you give them has the potential to broaden their understanding of the world around them. Pay close attention to their questions while you’re shopping, paying for a purchase or using an ATM. Don’t worry about getting technical with your answers; just explain what you’re doing in simple terms.
Elementary and Middle Schoolers:
Teach the importance of earning. Instead of simply giving your child a weekly or monthly allowance, put together a chore chart and show them that completing various chores will earn them different amounts of money. Teach them that money is something that has to be earned — not an endless resource they can simply ask for and spend whenever they want.
Explain opportunity costs. An important part of teaching children this age about money is showing them how to weigh the pros and cons of a spontaneous purchase. Explain that if they spend their money on a video game or gadget today, they may not have enough to go to the movies or get ice cream with their friends later in the week. Help them think about what they’re spending their money on and how to avoid making impulsive purchases.
Have a garage sale. Hands-on experience is a fantastic teacher, so consider having a garage sale. Your child can help you price items and make change when a sale is made. By being engaged in the process, your child may become more interested in learning about buying and selling.
Save together. Turn saving for something big (e.g., a vacation) into a family project. Keep a jar or other container in a visible place where your child and other family members can contribute loose change or extra earnings. Ask your child to help you add up what’s in the jar every week or two, and then perhaps deposit that money into a savings account, where it can also earn interest. By encouraging them to participate in building and tracking this fund, you’ll show them the rewards of saving.
Teenagers:
Help them open a bank account. Opening a bank account can be the first step toward financial independence. It is an excellent way for your teen to learn how to keep track of their own purchases and deposits, and can serve as an introduction to more complicated financial concepts such as compound interest and its potential impact on their savings.
Discuss credit cards. Once your child turns 18, credit card offers may start flooding in. Unfortunately, the idea of credit — of not having to pay for things immediately — can be very tempting for a young adult, so it’s up to you to explain the risks of overusing or abusing credit. Start these discussions early, sharing information about credit scores, timely payments and spending only what they can afford to pay off each month.
Collaborate on college costs. If your teen is preparing for college, encourage them to research education costs at the college(s) they are interested in, explain the importance of finding and applying for scholarships and grants, bring them in on the process of filling out the Free Application for Federal Student Aid (FAFSA®) and talk about how the family will manage college costs together.
These tips are just a starting point for how you can help children build healthy attitudes about money. Remember that the more you share of your own financial knowledge, the more likely they are to adopt good financial habits for life.
