Someone else will teach your children how to manage money if you don’t. And you don’t want to take that chance! We’ll demonstrate how to give your children the financial head start they deserve and prepare them for success at any age. Find out the 15 best ways to teach your kids great money skills below in this article.
Best Ways to Teach Your Kids Great Money Skills
How to Introduce Money to Preschoolers, Kindergarteners, teens, and children.
1. Save in a transparent container.
Although the piggy bank is a fantastic idea, children lack a picture. They can watch the money expanding when you use a clear container. They had a $1 bill and five dimes yesterday. They have a quarter, five dimes, and a $1 bill today. Discuss this with them and emphasize how it’s expanding!
2. Be a role model.
According to a University of Cambridge study, kids start developing good financial habits around the age of seven.
(1) You are being seen by little eyes. They’ll ultimately notice if you put down plastic every time you go to the grocery store or out to supper. They will also notice if you and your partner are fighting over money. When they get older, they will be far more likely to follow your healthy example if you set one.
3. Prove to them that things are expensive.
You must do more than only remark, “Son, that pack of toy cars costs $5.” Help them take out a few dollars from their jar, carry it to the register, and personally deliver the cashier the money. A five-minute talk won’t have the same effect as this straightforward action.
4. Display the opportunity cost.
Simply put, that is another way of expressing “If you buy this video game, then you won’t have the money to buy that pair of shoes.” Your children need to be capable of weighing options and comprehending potential outcomes at this age.
5. Offer commissions rather than grants.
Give your children more than just money to breathe. Pay children commissions for household tasks they complete, such as mowing the lawn, putting out the garbage, or cleaning their room. In their book, Smart Money Smart Kids, Dave and his daughter Rachel Cruze discuss this system in great detail. Your children will learn that money is earned and isn’t just given to them thanks to this idea.
6. Avoid impulsive purchases.
Mom, I just discovered this adorable clothing. It’s wonderful and perfect! Please let us purchase it. This may sound familiar to you. This age group is extremely skilled at making the most of the impulse purchase, especially when it is made with someone else’s funds.
Tell your youngster they can use their hard-earned commission to cover it rather than caving in. However, advise your child to put off making any purchases over $15 for at least a day. They’ll be able to make that financial decision the next day with clarity because it’s probably still there when they wake up.
7. Emphasize the value of giving.
As soon as they begin earning any money, make sure to educate them the importance of contributing. They can choose a church, a charity, or even a friend who could use a little assistance. They’ll eventually realize that giving has an impact on the giver as much as the recipients.
8. Instill contentment in them.
Your teen certainly spends a significant portion of their free time scrolling through social media on a screen. And while they’re online, they watch the highlight reel of their friends, relatives, and sometimes even complete strangers! This is the easiest way to fall into the comparison trap. Typical phrases include:
Mark’s parents just purchased him a brand-new car, Dad! Why must I operate this 1993 Subaru?
“Mom, this kid at school received a $10,000 budget for her Sweet 16 celebration. And I want to do that!
Happiness begins in the heart. Inform your teen that, while not being the newest car on the block, their Subaru is still in good enough condition to get them from point A to point B. And you don’t have to go into your retirement funds to have a special, milestone birthday celebration!
9. Charge them with managing a bank account.
If you’ve been doing some of the aforementioned along the way, by the time your child is a teenager, you should be able to set them up with a basic bank account. This advances the concept of money management and should equip them to handle a much larger account when they get older.
10. Have them start a college fund.
There is no better time than now for your kid to begin saving for college. Are they going to have a summer job? Perfect! Put some of that money—or more—into a college savings account. As they contribute to their education, your teen will feel invested in the outcome.
11. Instruct them to avoid taking out school debts.
You should sit down and have the conversation about how you will pay for college before your teen even applies to colleges. Inform your child that taking out student loans to pay for their school is not an option. Discuss all available options, such as community college, in-state universities, working part-time while enrolled, and immediately submitting a scholarship application.
Get The Graduate Survival Guide for them while you’re at it. It’s an essential tool to assist your college-bound child get ready for the next important phase of their life.
12. Explain the perils of credit cards to them.
Your child will start receiving credit card offers as soon as they become 18—especially once they start college. If you haven’t explained why taking on debt is harmful, they’ll end up using their credit cards just like everyone else. Keep in mind that you must choose the appropriate moment to impart these ideas to them.
13. Establish a basic budget for them.
Get your teen involved in our straightforward budgeting tool, EveryDollar, since they are already attached to their phone. Get your teen into the habit of budgeting their money now, no matter how little it may be. While still living in your home, you should teach them the value of creating a financial plan.
14. Explain the wonders of compound interest to them.
We are aware of your thoughts. How on earth are your teenagers meant to become knowledgeable investors when you can’t even convince them to brush their hair? It’s best if your kid can begin investing as soon as possible. A magical concept is compound interest! Early exposure to it will give your adolescent a jump start in preparing for the future.
15. Assist them in learning how to generate income.
Teenagers have a lot of free time—fall, summer, winter, and spring breaks—when you stop to think about it. Help your teen obtain employment if they want money (and what teen doesn’t?). Better still, assist them in starting their own business! It’s simpler than ever for your adolescent to launch their own company today and make a profit.