Learning the importance of financial literacy shouldn’t be a skill that we wait until we’re adults to learn. Good spending, saving, and budgeting habits should begin at a young age when we’re more likely to retain the information.
However, many parents aren’t sure where to start when it comes to educating their children about finances and often don’t want to overwhelm their children with information or deprive them of being kids. Teaching kids the importance of being finance-savvy doesn’t have to be a daunting task if you have a few helpful tips handy.
Make Saving into a Game
You can start instilling good savings habits in children from a young age by showing them that saving money can be a fun thing. Most children are visual learners and can benefit from physically seeing their savings grow, so find an old clear jar and designate that your child’s savings jar. Give them spare change and get them into the habit of putting it into the jar. You can even make it into a game by having them guess how long it will take to reach a certain milestone in the jar or have them guess how much money is in the jar once it’s filled up.
Take Your Kids Shopping
This doesn’t mean you should take your kids on a shopping spree! A great way to teach your children about finances is to include them on the weekly shopping. Bring along a calculator, some cash, and a shopping list and talk through the cost of each item, explaining that you have to work together to figure out how to get as much on your list as possible while staying within your allotted budget. Bringing along physical cash gives meaning to the shopping experience and helps them understand money in a physical sense than if you were to use a credit card or your checkbook.
Give them a Job
Many parents give their children a weekly allowance that they can use towards new toys or games. However, a quick way for children to learn the value of a dollar is to have them work for it. Give them small jobs to do around the house to earn their allowance each week and give each task a monetary value so they can see the breakdown of how they earned their pay. You could take this a step further and have them set aside a certain amount of their allowance to go into a savings account so they get into the habit of setting aside a portion of their earnings early on.
Explain Monthly Bills
Many children see their parents stress about money but may not understand why. Rather than brush your children off when they have questions about money or what it means to pay bills, explain the different things you have to pay for each month. They may not understand that the internet isn’t free, or that you have to pay a mortgage to live in your home, but the earlier on you can explain living costs to your children, the better prepared they’ll be to handle their own bills when they’re adults.
Be a Good Financial Example
Children are very observant, so one of the best ways to help your children learn more about responsible financial management is to live by example. Your children often look to you to learn many of their daily habits, so if they see that you don’t recklessly use credit, maintain a monthly budget, and put money away into savings they’ll be more likely to mirror the same behavior.
Educate them on Credit
With the average household debt topping off around $16,000, it’s essential to teach children about credit scores and how credit cards work. Teach them that their financial choices have consequences to their credit score, and if they make poor financial choices they may not be able to eventually purchase a car or a home.
Teaching your children to be fiscally responsible isn’t an easy task and may take constant diligence on your part. However, the reward may be substantial, as you’ll be preparing your child to enter the adult world prepared to handle their own finances responsibly.