April is deemed financial literacy month in an effort to teach good financial habits and establish the importance of financial literacy. Teaching kids about money at a young age is important so they can be led down a successful financial path. There are many ways to teach money lessons to kids, the hard part is figuring out where and when to begin.
How to Teach Kids About Money
The first step in teaching kids about money is to start early and often. As soon as your young ones are able to count, the money talk should start taking form. This will give your kids a head start on life lessons, which will help learning in school come a lot easier. A good place for parents to start is to read the book Money Doesn’t Grow on Trees: A Parents Guide to Raising Financially Responsible Children by Neale S. Godfrey. Money Doesn’t Grow on Trees offers exercises and concrete examples on everything from responsible budgeting to understanding the difference between “want” and “need” for children of every age. Hey, you might even learn a thing or two.
Teaching the Value of Money
Teaching the value of money is a good starting point. The way you teach this is with money games for kids. There are many games such as the allowance game that is perfect for teaching kids to identify money values, add & subtract money and more. Not only will kids learn something valuable, they will have fun doing it. Once they understand the value of money from the games, it is time to start giving them their own allowance so they can develop good spending, and saving habits.
Teach the Relationship of Work and Money
You simply can’t give your children money without them working for it. Whether it be chores, or getting good grades, money should be worked for to help them understand the relationship between work and money.
Open a Childs Savings Account
If your kid wants an expensive toy or electronic device, make them save for it. Opening a savings account for them will teach them how to save for the more expensive items they may want. Since savings accounts earn interest, they will see their money grow at a faster rate, and see how beneficial saving money truly is. Later on down the road, they will build good saving habits, so when its time to go to school or buy a car, they will have the fundamentals of saving money down.
Another good money lesson for kids is to teach them to shop around for the best price. Many stores offer different prices for the same items, and teaching them to find the best price will allow them to get what they want and save money doing it. It will also teach them that impulse buying can cost them more money than necessary.
How Not to Teach Kids About Money
Not all kids will follow your advice at first, the important thing is you shouldn’t get mad or frustrated. Kids need to make some financial mistakes in order to learn about the consequences of their decisions. Here are a few ways not to teach kids about money.
Don’t Follow Your Own Advice
Another important point I can’t stress enough is following your own advice. If your kids see you making impulse purchases, buying on credit all the time, spending more money than you make and not saving any money, what makes you think they won’t do it too.
Not Making Them Get a Job
Before they step out into the real world when its time for college, it is extremely important to make sure they have some type of working experience. Having a job will teach them that money doesn’t grow on trees. If you don’t make them get a job, they will believe money doesn’t take hard work to get.
Teaching kids about money isn’t going to be an easy process, you just have to start early and guide them over time, though your actions and advice. If you notice bad financial habits in yourself, work on fixing those problems before you pass it on to your kids. Remember, if you don’t follow your own advice, your kids won’t either.