How To Teach Kids About Money - While Making Them Respect It

How To Teach Kids About Money - While Making Them Respect It

Curious how to raise money savvy little ones in today’s world? Well, in today’s post I’m going to share with you some great tips that you can incorporate to help you teach money skills to your kids. Because if you really think about it – who are they going to learn this stuff from? If it’s not you – then who?

Most schools are no longer teaching basic money management to children, which means if the parent isn’t teaching money skills at home then our kids are having to figure it out for themselves. Just imagine your child never learning the value of a dollar, how to balance their bank account and why in the world a credit card could be so dangerous if they don’t know how to use it. If we don’t take the time to teach our kids simple money management then we’re doing them a disservice.

None of these concepts are going to be new, but if you take a combination of these approaches and apply it to your kids then that’s where the magic happens. The goal is to teach our kids how to control their money so they don’t end up being controlled by it someday. I was raised by an accountant and financial planner, so I learned very early on the value of saving, giving, and spending. I hope that we are able to pass those same money skills on to our son and I know the earlier we start, the better chances he will have to have a strong relationship with money.

SAVE, SPEND, GIVE

Kids should understand the value of saving, spending and giving their hard earned money. By use separate jars or piggy banks for each category children can start to learn what portion of their money goes into each.

The idea behind this concept is so much more than what it seems. By teaching our little ones to save a portion of their allowance each and every week, we have a hope they will continue this skill forward through every job they have. By saving 10% of your income you can easily have a fully funded emergency fund or be further along in your journey to retirement.

Another benefit of this skill is teaching math to your little ones. Almost any young age can easily learn the math needed to figure 10% to savings and 10% to giving with each allowance. Even younger than 5 can learn this skill – you may have to use round numbers or quarters or dollar bills to keep it simple, but it is possible. As your child gets older then they should be able to calculate 10% without the use of a calculator.

So each week your child should be dividing their allowance between three jars – 10% for savings, 10% for giving and 80% for spending.

MAKE THEM USE THEIR OWN MONEY

When you go to the store with any child, you probably hear over and over how badly they want or need some new toy.

“Mommy, I just have to have Spider-Man!”

Instead of saying no and starting a war inside of Walmart. You can simply ask, “Did you bring your money with you? If so, let’s take a minute to see if you have enough.” If they don’t have their money then say, “Let’s take a picture of it so we can remember to look at home to see if you have enough money and if so, we’ll come back.”

By making them use their money then they will gauge whether or not they really need it. Plus, if they don’t have enough then you’ll teaching them an even more valuable lesson – save for what they want.

SAVE FOR WHAT’S IMPORTANT

As an adult you probably learned that money doesn’t grow on trees and just because you want something doesn’t mean it’s going to magically appear. You have to work. You have to save. You have to sacrifice.

By having separate categories – save, spend, give you can also teach your kids the importance of saving for something they want. When they see something they just have to have then you can sit down with them to create a savings goal.

You can use sticker charts to represent how much money they have saved to show their progress. That way when they finally reach their target they will be beaming with pride because they did it on their own. That toy, game, stuffed animal will be so much more valuable because they know that they paid for it.

BE THE BEST EXAMPLE

Let’s be honest, we probably learned most of our money management skills from our parents – either by following their example or by choosing to be in better control of your finances. The best way to teach your kids financial responsibility is by setting a good example.

Don’t be afraid to have tough money talks with them. My parents were never afraid to share bill information with my sister and I. They didn’t do it to scare us or worry us, but they wanted us to understand how we kept our lights on and food in the fridge. It was important for them to be transparent with us and I think that has served us well.

READY FOR MORE?

Do you need a bit more guidance when it comes to your own budget? Grab our Budget Success Checklist to help you. This nine-step guide is the perfect tool to help you learn how better your money management skills.