12 Tips for teaching your kids about money
-Apr 15, Rachel Richards, Living -
If you don’t talk to your kids about money, someone else might — and you may not like what they’re teaching. We have put together a simple guide to raising children that will be financially-smart.
The more you talk to kids about money, the easier it will be for them to make smart financial choices and decisions. It’s never too soon to start instilling these fundamental life skills. Here are some tips to help create money-savvy kids.
1. Pay in cash. Cash is easier for kids to understand than a credit card. You can’t spend more than you have, and when it’s gone, it’s gone.
2. Dont forget about coins. Help kids sort out coins by type and explain the concept of equivalency — like two nickels equals a dime or 10 cents.
3. Take kids out with you. Use everyday situations to teach kids about money, such as grocery-store shopping. Show them how much money it costs to pay for cookies or why you choose a store brand over a name-brand one.
4. Dust off that Monopoly game. Playing games that involve money such as Life or Monopoly can help teach kids about finances.
5. Bring them to your bank. Even if youre just taking money out of the ATM, let them count the money that comes out.
6. Explain credit cards. As much you may try to use cash, kids have likely seen you pay with a credit card. Discuss the concept of a credit card in age-appropriate terms (interest is a term for older kids, for example). Help your child understand that these cards are linked to your money, so you shouldnt charge more than you can afford. And that you have a limit as to how much you can charge.
7. Give kids an allowance. A tried-and-true way of teaching of teaching kids about money management is by giving them allowance. They can do chores or earn it by doing something else youve agreed upon. The amount will vary based on the childs age, your financial situation and their ability to handle money. Then, consistently distribute the money according to a predetermined schedule.
8. Practice spend/save/share. Many experts advocate the save/spend/share (or give) approach. Whenever your children get money, such as from their allowance or birthday, place it into three clear jars, piggy banks or envelopes. The money can be divided equally or you can come up with a percentage for each jar. The save money can go toward something he or she is saving up for (see goals below). The spend money can be for short-term, small purchases like toys or books. The sharing money can go to a charity of their choice to help teach them about giving to the less fortunate. Count how much is in the jars whenever you add money and discuss how much they need to reach their goals.
9. Promote goals. Encourage them to save up for something they really want. It shouldnt be something thats so pricey that they won’t be able to buy it for a while. Its fine for them to wait a bit, but if it takes too long, theyll only get frustrated. The point is for them to learn about saving for a goal.
10. Let them make mistakes. Sure, you may think that striving for a toy car that he has a hundred of is silly. But let these healthy and normal mistakes teach a lesson about money. Its important to give them freedom to spend their money how they want while they’re young and dealing with $6 versus $60,000. Dont lecture about a poor choice; instead, ask, What would you do differently next time?
11. Share details on finances, within reason. Let kids know how much you spend on clothing, the mortgage, groceries, insurance and more, in an age-appropriate manner. Think about how much information you’re sharing, though. Too many details may get kids anxious about your family’s financial situation. This doesnt mean you have to lie, but consider giving them selective information so that they’re not stressed and worried.
12. Model good behaviour. Do your best to make your own good money choices and set good examples for the sake of your kids. If youve made some financial mistakes, own up to them (don’t lie) and explain the lessons you’ve learned.
Money Apps for Kids
Here are five apps that you can use to help teach kids about money:
3. Savings Spree
4. Star Banks Adventure
5. The Game of Life