Kids who learn about finance management early in life are more likely to be financially responsible as adults. Young children might not need to know about mutual funds and mortgages, but they are smart enough to start learning about the value of money. Teaching your child about the importance of saving money and working hard to get it will give him a solid foundation for making the right financial decisions in the future. Kids learn best when they have no idea that they are learning, so it’s important to come up with fun ways to teach them about serious subjects like finance. Depending on your child’s age and interests, there are a few effective and exciting ideas you can try to get him interested in learning the basics of money management.
Since it’s a little too early for your child to keep track of savings at your bank’s local branch, get him started with a piggy bank. To a child, a piggy bank is essentially the same thing as a savings account. Encouraging a child how to use one is a great way to teach him how banks work and why saving money is important. Ask your child to put some of the money he earns into the piggy bank instead of spending it. After he collects a good amount, take him to the toy or candy store for a reward. Let him pick out whatever he wants to buy because he earned it. It’s a good idea to give your child some extra money as an interest on his savings. It’s an easy way to teach your kid that saving pays off in the long run and leads to better rewards than spending a little money at a time on smaller things.
Make sure that you are giving your child money for a job well done and not just to fill up his piggy bank. Have your child do light household chores to teach him the value of money. It’s important to show young kids that every little bit of money requires hard work. You can have your child clean his room or help you out in the kitchen. Give him age-appropriate tasks that won’t be too overwhelming. Make sure that your child connects the work he is doing with money by giving him a small payment immediately after he is done. Try to use change, so it’s easier for your kid to put a portion of his reward into the piggy bank. Older children can get money in bills as long as you use small denominations.
It’s important to let your child spend a little money after he earns it instead of putting everything into the piggy bank to keep him interested in making more. If you are teaching your child finance management, chances are that he is old enough to count. Spend some time counting money together, and come up with financial goals. Setting objectives will give your kid a chance to practice both math and financial responsibility. Most importantly, always set a good example by taking control of your own finances and slowly teaching your child how to make the right financial decisions as he gets older.
Naomi Esterly believes that it’s never too early to teach kids the value of money. In this guest post she provides practical lessons on how to get them started with finance management. These are the very same things she’s taught her kids and she hopes that you’d find it useful too. When she’s not penny-pinching she is a freelance writer.