Teach Kids about Money Now – Don’t Wait
Teach Kids about Money – Strategies for Raising Smart Spenders at Every Age
It’s never too early to teach kids about money. Whether they are 5 or 15, you should have an honest conversation with them about finances. With young people digging themselves into debt with credit cards at an alarming rate, make sure that your children have the tools to make good choices when they are out on their own. Ask any adult in their 30’s, and you’ll find many of them still paying off the credit card debt they acquired in their 20’s. When you teach kids about money, it’s best to lead by example. Start by making sure that your own finances are in order. After all, how can you expect your child to have good spending habits when yours may be out of control?
Another important point when you teach kids about money is to make it age appropriate. A toddler may not understand what you are saying when you are talking about 401K’s and stock options, so you need to pick a topic that they will understand. Here are some suggestions to teach kids about money at any age.
[bctt tweet=”There are different strategies by age group to teach kids about money…” username=”HBSMoneyTips”]
Toddler and Elementary School Age Kids
Conversations about money at this age should be basic. You may want to use fun games to teach them about what money is and how to count it. This is a great time to get them interested in saving, too. Set up a bank that they can collect loose change and money. Every time someone gives them money, have them put it in their bank. Small children love this and love watching the bank grow. You can also start to have some basic conversations about where mommy and daddy get their money from. You could even start a small allowance for them to help with chores around the house.
Middle School Age Kids
Middle School kids start to get interested in electronics and other expensive gadgets. Next time your child asks you for a video game, make them save up for it. Not only will they appreciate it more, they will also begin to understand the concept of saving towards something. They will start to make choices with their spending. If they give you a list of a few things that they want, you can explain to them what they cost, how much they have and what they can afford. This is a great head start to when they will spend independently in their teenage years. This is also a good time to teach ways for kids to earn money. Have them set up a lemonade stand, do chores for their allowance or walk the neighbor’s dog. Those are all great ways to not only teach kids responsibility, but about the value of hard work.
Teenagers
The most important time to drive home the concept of responsible spending and credit is as a teenager. At 18, they are eligible to apply for a credit card and can start spending like an adult. Before that happens, use this time to practice. They also need to learn how to build credit without going into debt. For teenagers, work with them to set up spending goals. If they want to get a new tablet, show them what it costs and how many chores or hours worked they need to complete to buy it. They should also have a savings account. Once they have a clear understanding of how to manage what comes in and what goes out, you can set them up with a checking account. Make sure that you are monitoring their spending closely so you can address any issues immediately. The teenage years are also a great time to teach about budgeting. By giving your teenager a budget for back to school clothing (or other items they need for school), it will get them thinking about how they are spending money. If they have $200 to spend and they really want brand name clothing, they may only be able to get 3 or 4 items. If they shop sales or choose the clothing at a less expensive store, they can get much more. This is also the time to encourage a small job or other ways for kids to make money outside of the home.
Teaching kids about money doesn’t need to be difficult. By starting young, you are giving them a great gift. Many people go out on their own at 18 and really have no idea how finances work. Those kids are more prone to struggle with finances in adulthood. Here’s an excellent financing guide that was brought to our attention. Give it a read, it’s very informative. What tips or tricks did you use when teaching your kids about money? Share with us in the comments!
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12 responses to “Teach Kids about Money Now – Don’t Wait”
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Gust Lenglet – Platinum Author
Hi Gust. I love playing supermarket with my toddler – we have a little cash till that makes sounds. He’s starting to learn what money’s for and what it can get him. Let’s see how it helps him!
Glad to hear that you’re starting your child early in learning about money. Thanks for the comment.
As parents, one of our main goals is to prepare our children for the “real world.” By slowly introducing budgeting and finance, the transition from childhood to adulthood will be much smoother, as the post suggests. Thank you for sharing!
Hi everyone, I have a 6th grade daughter right now. I would love for her to begin earning her own money, but I’m not comfortable with giving her the responsibility of babysitting or dog walking. Are there any other solutions, besides the classic lemonade stand?
I have a similar situation as Shayla. My son is 7 years old, and even though he is responsible, he’s still too young to be doing jobs like baby sitting or even walking dogs in our neighborhood. Doing yard work at his age could present some risk as well. I’d be interested in some suggestions. Thanks a lot.
Our kids are younger and we use fun games with them to teach about saving money. One is not “wasting coins” when the lights in rooms are left on. We play trying to catch other family members wasting them…. it’s fun!
Thanks for your comment Derek. Glad to see that you are working with your kids to teach them about money. Families should never rely on the school system, even those that have money in the curriculum. Most of the best lessons will be learned at home.
Credit card debt is insane these days. I’m currently still in high school, but I’ll be sure to steer clear of racking up debt. My older siblings have piled up enough debt to last my family a lifetime!
I have two teenage girls right now, and we thought thrift shopping was cool even before the Macklemore hit! 😉 Seriously, you would be amazed at the great clothes you can find at places like Goodwill and Plato’s Closet. We even keep the good karma going by donating gently used items so other folks can also get a bargain!
Worth from a young age to learn how to manage their finances. This is a good school for the future.
Awesome post! As a parent and a cashier at a big box store a agree so very much! I see so many young adults that toss all name brands in their cart(thank goodness some are rebelling and going for generic and budgeting) but they learn from parents. Their parents may have a lot more money(or just be bad with it) and they were never taught to live within their means. It’s terrible when kids don’t know about saving money!
This is a good post. I taught my kids early on the value of good money management, If I do say so myself they are doing a pretty good job at following advice, I am so proud of them. It is very important to pass GOOD money management to the future generation,,,,we start with ourselves and pass iton.