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How many of us look back at childhood and wish we were introduced to money and financial tips at an early age?
Unfortunately, only a few schools teach the importance of saving, spending and investing money. Learning about credit and balancing an account is a life skill as important to being a successful adult as reading, writing and arithmetic. Children want to learn about money and, depending on their age, they should be taught this basic skill.
Kids learn a lot from example, even when it comes to money. It’s never too early to start teaching your kids how to properly manage their finances so that they can follow what they see. They grasp the concept of money from a very early age- you work to earn money and you use money to buy what you want. Teaching younger kids the value of money through real life situations and examples will help them understand where money comes from and how it is earned.
Here are a few examples of how you could approach this with your kids:
At the ATM
The ATM is a great place to start teaching kids about money. You could explain to your child that the ATM holds the money you have made by working hard and saving. It is not just a device on the wall where money comes out automatically. 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. This way, you can explain to them all about having a savings account in a bank. Many banks offer ‘Kiddie” Bank accounts linked to a parent’s account.
At the supermarket
When buying items at the supermarket, you can explain to your kids how items are priced and that you can get cheaper or more expensive versions of the same product. This is also an opportunity to discuss how you can shop around for the best price. You could get them to compare prices for you and pick the cheapest one. If they want a particular brand then explain the price difference to them.
If you receive bills in the mail or online, this can be an opportunity to explain that electricity or your internet connection costs money. You could explain that to pay an ‘x’ amount, it took you so many days at work to earn the money. This will help create a connection between time spent at work and money, as well as the fact that electricity and the internet cost your family money. It might also make them think twice about wasting electricity.
Maintaining a budget
Involving your kids in discussions about your family budget is another way you can talk to your children about money. This helps give them the big picture about costs and spending. By explaining how much money your family has to spend every week and how this money is spent your kids will better understand the costs of family life and how much can be saved for other things.
How do you teach your kids good financial habits? Do share with us.