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Last Updated on May 16, 2024 by Alaina Bullock
One of the most important lessons we as parents need to teach our children is how to manage money. Unfortunately, the majority of schools don’t have many state requirements for teaching children about money. In fact, right now in the United States, only 7 states require high school students to pass a basic finance test in order to graduate! That makes it very possible, depending on where you live, that your child may never spend even one hour talking about this important topic before being on their own.
While teaching kids financial responsibility seems like a daunting task, it doesn’t have to be. Here are 5 simple tips for teaching children about money and money management skills.
Teaching Children About Money – 5 Simple Ways
1. Start Teaching Children About Money Early
Teaching children about money can begin as early as age three or four, or whenever your child begins asking about money. The earlier you start, the more experience they will have learning about and handling money. Lessons at first should be very basic. For example, start out by explaining that you have to work to earn money. As your children grow and mature, you can gradually get into more in-depth instruction.
2. Set a Good Example
Just as with everything else, children learn by the examples we set. They are also more likely to learn from what they see us do versus what we say. They watch what we do at the grocery, the mall, the bank , etc., and they copy or mimic our financial attitudes, values and behaviors. If you set a positive example for them, they’ll be much more likely to follow it when they get older.
3. Talk to Your Kids
I was raised to believe that talking about money was taboo, even with your own family. Well I am here to tell you that that mindset is wrong. You wouldn’t want your children learning about sex and drugs from someone else, so why would you want someone else teaching them about money.
Talk to your children about how you earn money and how you spend it. Explain the differences in paying with a check or cash versus a debit or credit card. When you get money from the ATM, explain that the ATM is a way to access the money you have made by working hard and saving. And that when you take money out of the ATM it is taken from your bank account and you’ll have less in your account to spend later.
When you take your child to the grocery store, explain your purchasing decisions. For example, “We are buying these bananas because they are on sale,” or “We’re using coupons I clipped from the newspaper to help us save some money”.
In addition, you should also be open to discussing your own financial mistakes, as long as the lesson is something your children are old enough to understand.
4. Encourage Them To Earn it
A popular way for teaching children about money is by giving them an allowance. Consider giving your child some chores around the house to earn their allowance. Besides building a work ethic, your child will learn responsibility, accountability and time management. Additionally, when children receive an allowance they begin to learn basic budgeting and rationing skills. And as they manage their allowance money, their money management skills will improve.
Give them some general guidelines on how to spend and save their money, but also give them the freedom to make their own financial decisions and their own financial mistakes. Offer advice, but don’t tell them what they should do with their money. It’s better that they make those mistakes—and learn from them—now rather than later.
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5. Hands On Experience
One of the best ways of teaching children about money and money management skills is by hands on experience. A simple way to do this is by using a learning platform like BusyKid. BusyKid is an web-based chore/allowance platform and app where kids can earn, save, share, and invest real money. It teaches children financial responsibility by encouraging them to perform household chores in order to earn their allowance. Children will get a feel for what it’s like to earn real money and learn how to make wise financial decisions. Think of it as your child’s first job with direct deposit!
Teaching your children about money management doesn’t need to be overwhelming. By starting early, setting a good example, engaging in open conversations, encouraging them to earn their own money, and providing hands-on experience, you can lay a solid foundation for their financial literacy. Remember, the lessons they learn today will guide their financial decisions in the future. Happy teaching!
Do you have any tips to share about teaching children about money and money management skills? Let us know in the comments below!