How To Teach Kids About Money
How to Teach Kids About Money – Get Ideas That Really Work
There comes a time when parents with children begin to read books and decide how to teach kids about money. This is not just one simple conversation that you have with your child, but is an ongoing process.
There is no one “book” to teach from and there is no universal method that will fit every child. You’re dealing with different personalities, comprehension levels, as well as the ability to learn.
Educating your child about money management is critical and should start at an early age. Most states have no curriculum that will teach children about money, so the responsibility must fall to the parents.
Some suggest that the decision on how to teach kids about money is when the child can understand the difference between needs and wants. Until they know the difference, you will probably have a difficult time explaining how their money should be spent.
The difference between needs and wants generally becomes clearer as the child nears school age. We’ve all heard young children in stores throwing a tantrum because the parent told him that he didn’t need another toy car or perhaps candy. They need to be shown with a detailed explanation what things are needs and which are wants.
When that is accomplished, you’ve taken a big step in learning how to teach kids about money. When you’re teaching kids about money, you need to be sure to touch all of the bases regarding money. Begin with how your money is earned, and then how it is spent. Then you can show how it is spent on the mortgage or rent payment, utilities, insurance, food, clothing, medical bills, car loan and expense, saving, retirement, etc.
A child in first grade might not understand all of those things, but as they get older it will begin to sink in. You can show him how your paycheck is deposited into your bank account, and then how you write checks to pay all of your bills and other expenses. There is no need to let them see the actual numbers, only the concept or procedure. This can be reinforced by showing him that these are all needs to support the family.
At this point, it usually is a good time to bring up the concept of creating a budget in order to have better control of the spending. Again, without showing him actual figures, you can list the various budget categories to show him just where the money goes.
There are many opinions both pro and con regarding an allowance for kids, and we do recommend that this be done. Parents earn money by doing work and children should be taught the same. There are some things that the child should be expected to do without getting paid, and these can be spelled out clearly.
We have many individuals in our society today that simply don’t believe in working and are content in receiving welfare handouts. Before any of you call me to task on this comment, I realize that there are many on the welfare rolls because of various reasons beyond their control. I understand that, and my problem is the others that are too lazy and are nothing but parasites living off others. I don’t want my children to be in that group, I want them to realize that they must work to earn money…there can be no other way!
That being said, we taught our kids to work hard and to give 110% whoever they worked for. I’m happy and thankful to report that it paid off big time and we’re proud of them.
At this point, most parents feel that their job on how to teach kids about money is completed. We recommend that you continue with the lessons and include borrowing, interest, and especially credit cards. As they begin to consider college, they need to know the importance of a good credit score and rating. If you want your child to be financially responsible, you need to cover this topic in great detail.
If your child is going to anticipate large student loans for college, it might be a good time to revisit the need and want topic again. Every child doesn’t need to attend Harvard or Yale to get the degree they have decided upon. Community college for a couple of years can reduce the student loan requirement substantially, and perhaps a local state college can help to keep the loans low as well.
You don’t want your child to graduate from college with huge student loans and/or credit card debt that they will be paying on for many years. It’s true that children sometimes have to learn from their own mistakes, but we as parents need to do our best to keep those mistakes on the low side. We can’t micromanage their finances for them, but they need to know that we are there for them with good sound advice.
So, have you found out how to teach kids about money? Do you have some secret method that worked well for you? We’d love to hear about it. Please do us a favor and share your experience with us in the comments below.
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13 responses to “How To Teach Kids About Money”
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Gust Lenglet – Platinum Author
And don\’t enable them! I\’ve seen more people get into trouble because they try to buy the love of their kids. More stuff won\’t make them love you more. Kids want structure. They want discipline. Force them to grow up and they won\’t be attached to you financially forever!!
I agree. Kids want and certainly need discipline. We’ve all seen kids that have been spoiled by their parents by giving them everything they want. You can’t buy respect or love, and that’s what its all about.
I teach my kids about money by teaching them how to save and not to over spend. Works for us just fine.
Thanks for your comment Christopher. What ever type of teaching about money that works best for you is great. There is no “one size fits all” when it comes to teaching children.
I work retail and have seen tantrums to many times and parents just give in. my son did that once and I walked out of the store and we sat in the car until he was done. I was always taught to work and was made to get a job starting at 15….I have worked since then. Also, now days tech school or a medical field eveen the assistant is av aveery good bet to get away from huge loans with little reward a terrible place for us to be at !
Kids throwing a tantrum in a store is not a good thing. There are studies being done regarding college degrees and the results are alarming. There are many degree fields where the graduate can’t find a job, while those with tech school training are able to. The college loan program is having many problems with loan delinquencies. Graduates can’t find a job or if they do, it doesn’t pay enough to service the loan, & a default occurs. Not good.
Parents should make kids money wise. So many kids have the perception that you put a card in the bank machine and it spits out never ending money. Kids will have a real wake up call when they get older if they are not somewhat knowledgeable about money matters.
I know a few adults that still think that way & its very sad. Some say that there are many in government with the same bad habits.
Great idea! It is the duty of the parent to prepare the kids for life, and money is a HUGE part of that. If kids don’t learn how to handle money right, they’ll make huge mistakes as adults that will cost them dearly.
I think that this might be the toughest part about raising children. My five year old assumes that there is an endless supply of money to buy things and go places with. It’s hard to explain something as important as money to a young mind.
My daughter is very tight with her money. Now mine is another story! I would like to try out these games with her and see if it teaches her a little more about where money comes from and that it isn’t just a big invisible pile of it sitting somewhere for her to use! 🙂
Teaching children about money is a very important thing, especially before they go to college. If they go to college and have no idea how to budget their money, they usually end up in the hole much more than they should be after college. My state has a financial literacy class that you can take in high school that would teach the basics on using your money. But I don’t know how many other states have that.
I think that every state should have a personal finance topic in their curriculum. So many kids graduate from high school & have no concept of proper credit card use or the budgeting process.