Have you ever asked yourself, “When should I start teaching my kids about finances?”
While there’s no right answer to this question, a good place to start is whenever they have developed fundamental math skills. This is typically between the second and fourth grade.
The goal when beginning to teach your child about money is to help them understand the value of money and the importance of saving. You’ll want to use simple terms and relatable examples that you know your child will be able to grasp. One of the best ways to do this is to use your personal experience. Explain how you work a job to make money, and the money you make from said job allows you to buy things like groceries, clothes, vacations, etc.
If you want to take it a step further, you could set them up with a regular allowance or pay them for doing certain chores around the house. This will give them an applicable experience in understanding the most basic way money is earned. There are multiple ways to introduce money fundamentals to your child(ren), so do some research to find one that works best for you.
Once they understand how money is earned, you can segue into the basics of saving money. A great way to do this is by using a visual example such as a piggy bank or clear jar. This allows children to literally see the money they save and how it accumulates over time. When they are comfortable with the concept of saving, share how their savings can be used for something else in the future. Explain the different ways they could use their savings – to buy something they want for themselves or purchase something for someone else for a special occasion such as a birthday. If you haven’t already, this would also be a good place to open a savings account for your child.
When applying this to real-life, give them the opportunity to use their savings to purchase something they want. This will allow them to determine if they have enough money saved or not helping them comprehend if they need to save some more money or if they already have the amount they need. Once they have the amount needed, let them hand the money to the cashier so they get excited and experience the value of “this for that.”
Helping your child save money can bring up feelings of frustration due to having to wait to purchase something they want. This is a great opportunity to validate those feelings and explain that you, their parent, or guardian, also sometimes have to wait to purchase things you want. Set a regular time together where you sit down and count their money with them, so they know just how much they have saved. And don’t forget to encourage them on their saving journey.
Setting a good foundation for understanding money can help your children be more responsible with it as they get older. Even the smallest money tips can impact the way your children will think about and use money in the future. Visit our Personal Money IQ and scroll down to the “Kids and Money” section for more tips.
