Parents are constantly teaching their children about money management, whether they’re aware of it or not. Kids pick up on whether you plan your shopping, put money into savings, or write a cheque. At its most fundamental, teaching money management to children is about setting a good example. Starting at a young age, teaching kids money management will help them in their understanding of financial matters.
Simple, practical, and age-appropriate money lessons like these can have a big impact on children’s financial literacy.
1. Money Doesn’t Grow on Trees
When kids see money pop out of the ATM, they don’t realize that it is a finite resource. Explain that you work to make money, and the bank is just a place that keeps it safe.
2. Work with the Budget
The best way to teach kids to start managing money is to give them some. If they spend their allowance on a new Star Wars figure and don’t have enough left for a DVD they really want, that’s actually a good thing as they will learn the consequences of not prioritising.
3. Encourage Older Kids to Earn Extra Money
Middle school-age kids may not be eligible to get a traditional job, but that doesn’t mean they don’t have opportunities to earn extra money. Here are some ways kids can earn a little extra:
- Organizing and setting up a family garage sale
- Doing yard work in summer, and snow shoveling in winter for neighbors
- Pet sitting and dog walking
4. Don’t Spend It as Soon as You Get It
Curbing impulse buying goes hand in hand with teaching delayed gratification. Show by example. Before you go shopping, create a budget. Outline what you’re going to buy, what stores you’re going to, and the price range for each item. Then compare prices online and clip coupons together. This way, they’ll learn that planning purchases before you buy is the routine.
5. Teach Children the Importance of Giving
While earning, saving, and spending are important, so is helping out those less fortunate. Explain to your kids why you give money to charity and encourage them to give some of their allowance or other earnings to the less fortunate. Learn about what your child feels strongly about and show him ways to help. If he loves animals, for instance, help him raise money for a local animal shelter. If he’s especially fond of his grandparents or great grandparents, find out if he can help with your local Meals on Wheels program. Children should understand that giving of their time is an important way to help others when they don’t have a lot of money to donate.
Sound money management is one of the most valuable life skills you can teach your children, and starting when they’re young is best. Demonstrating good money management yourself is extremely important, because kids are so good at absorbing what’s going on around them.