How to Teach Kids About Money
It’s never too early to start teaching them about money! With these tips and tricks, it’s as easy as 1, 2, 3!
Managing money can be easy, with the right saving and spending habits taught from a young age. When it comes to making wise money spending decisions, practice makes perfect! Starting good savings habits when they are young makes for positive habitual practices. For one, kids learn by watching. By following your own advice and being wise with your money, they will be more likely to pick up your good habits.
Here are a few easy activities you can do with your kiddos to help with understanding money and savings, as young as 5 or 6 years old!
For the first method of teaching how to budget, start by giving each child 10 dimes. Then have a fun arts-and-crafts time and decorate a few jars with each kiddo. Label one jar “spend” or “fun,” one “save,” one “invest” or “education,” and one “donate” or “charity.” Then have your little one drop 7 dimes into the spend jar, and one dime into each of the other jars. If you repeat this weekly, your kiddo should have a stack of dimes in his or her giving jar. You can help them pick out a charity or church to donate to, and a great method to show the importance of this giving is to match their donation dollar for dollar. They can save up the income in their spend jar, or buy something every other week if they want. Let them feel the pride of saving up for something they want from the store!
Don’t forget to take their savings funds to the bank and put them into a savings account for your young ones. Having them fill out a deposit slip with you is a great way to teach them as well! Our Kids Club is great for your little ones – save for them and save with them!
Grab a few envelopes for each child, and help them write “savings,” “education,” “charity,” and “fun” on the front each respective envelope. Each time your kiddo receives money for mowing the lawn, for a birthday, or Christmas, take the funds and break it up into small bills. Have your child help you split a little of the funds into each envelope, 10% into savings, 10% into education, 10% into charity, and the remaining money can go into the spend/fun category.
Rather than teaching the basics and leaving it up to them, have your lessons grow with your kiddo. When they are old enough, or get their first job, help them open their own checking account. That way they can deposit the funds directly into their own account. Another great way for them to see the envelope or jar method carried into adulthood is to open multiple savings accounts, nicknaming them the same as their envelopes. A great resource at IAACU is the Dollars and Sense checking account. This account is for children 13 and up and offers great rates and benefits for a healthy financial start to independence.
When they get to college age, bigger conversations are prompted, as their finances become more complex. For example, credit score is an important factor in adulthood. Possibly start the conversation on credit score as they are preparing to fly the nest. Credit is tricky to bring up once it drops, don’t take this lesson lightly.
These interactive money lessons are helpful when your desire is to instill responsibility and financial pride in your young ones. Starting good money habits when kids are young is key. Keep teaching, it’s never too early to start the conversation, and don’t forget to live by example! Where you lead, they will follow.