You want your children to be great at managing their money in the future, but where do you begin to teach kids about money? From introducing the concept of money to investing, here’s a road map to guide you through the process.
Introduce the Concept of Money
Introduce young children to coins first. Teach them the value of coins and encourage them to save their coins in a piggy bank.
Lead by Example
Explain what you are doing when you write a check, use an ATM card, or pay for groceries. Kids are very observant and will learn many of their money concepts by watching you and copying your behavior.
Open a Savings Account
Explain to children how compound interest works and show them how their money grows in a savings account. Expand to a checking account once they are ready.
Use an Allowance
When children receive an allowance they must learn very basic budgeting and rationing skills. As they manage their allowance money, their money management skills will improve.
- Make Learning Fun
Play money games that encourage learning. Board games, online games, and homemade games are all possibilities.
Allow Them to Make Mistakes
Let your children waste their money and make mistakes with their money. It’s a valuable teaching tool. However, be ready to step in and help guide them when they need it.
Let Them Earn Money
Working summer jobs, becoming entrepreneurs, and working for mom and dad all help kids learn about business and hard work.
Teach Children to Budget
Allow your children to plan and budget for a family event to practice their budgeting skills.
Teach Your Teens About Credit
Help your children understand the concept of delayed gratification and the pros and cons of buying on credit.
Children will often be surprised by the withholding on their first paycheck. Explain the concept of taxes early on and their paycheck will meet their expectations.
Encourage Charitable Giving
Introduce philanthropy to your children early and they will likely become eager volunteers and donors.
Introduce Long Term Planning
Teach your children about long term savings and debt. Discuss the costs of college, cars, houses, and retirement early to give them a head start.
Teach Them to Invest
Once they have mastered basic banking skills, encourage your children to learn about the stock market. Explore appropriate stocks and mutual funds with your children.
Teach Children to Set Goals
Many successful financial milestones are achieved by goal-setting. Encourage your children to set savings goals and work towards them.