Money lessons are important for everyone to learn and it’s important to start young. There are many different ways you can teach your kids about important money lessons depending on age.
For Preschoolers and Kindergartners
Having a piggy bank is a good idea, but young kids need a visual. Use a clear jar for savings, so kids can see it growing. Yesterday there were five dimes and a dollar bill in the jar, and today, there are two quarters, five dimes, and a dollar bill. Talk this through to make it a big deal. Now is the time to start setting an example. Money habits can be formed as early as seven years old. If you and your partner are arguing about money or you are using plastic every time you go to the store, your kids will notice. Show them that items cost money. Don’t just say this toy costs $10 and instead have them grab the money out of the jar and hand it to the cashier.
Elementary and Middle Schoolers
At this age, you can start explaining about opportunity costs. For example, if your child wants to buy a video game then they won’t have enough money for that pair of shoes they also want. At this age, kids can weigh decisions and understand the different outcomes. Instead of offering allowance, give money based on the chores they do around the house. This concept will help your child know that money is earned and not just given to him or her.
At this age, kids also know how to capitalize on impulse buys, especially since they are using someone else’s money. Instead of giving in, encourage your child to use their hard-earned money and wait a day to make sure that they want to purchase that item.
At this age, kids are spending a lot of time online and it’s easy to fall into the comparison trap. Teach them contentment to know that what they have is valuable. Even though a friend may have a new car, their car, while not as new, will still get them where they need to go. It’s also now time to start teaching some responsibility and you should set up your kids with a simple bank account. This will take money management to a new level and prepare them for when they are older and managing more money.
This is also a great opportunity to start teaching them about saving for college and it’s important that your teen has some skin in the game and contributes to their education expenses. If your teen is glued to their mobile device, use this to your advantage and get them on a simple budget with a budgeting app. No matter how small your teen’s income is, they should learn the importance of planning for their money while they can still make a few mistakes. Other important things to start teaching at this age are compound interest and the danger of credit cards. You can also discuss with them how they should be making money in the future and perhaps even start their own business.
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