Fun ways to teach children about money. Want to teach your kids about money? Start by including them in the conversation. — How Parents Can Teach Their Children About Money

Teach kids about money is one of the most valuable life skills parents and guardians can impart. Financial literacy is essential for children to grow into responsible and independent adults. How do you foster financial independence and financial literacy among young people?

This blog post will cover various aspects of money education for kids, from basic concepts to practical strategies for instilling sound financial habits.

What is Money?

Money is any object that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally, a standard of deferred payment.

Why is it Important To Teach Children About Money?

Teaching children about money equips them with the knowledge and skills they need to manage their money effectively now and in the future.

Children who do better with money tend to have parents/carers who talk to them about money and give them responsibility for spending and saving from an early age.

Take some time to think of your own money habits:

Did you pick up any of your money habits from your parents or caregivers?
What good money habits can you trace back to your childhood learning?
What bad money habits can you trace back to your childhood learning?

Teaching children about money will help make their future more secure. So the sooner you start developing their financial skills, the sooner they can start to hone those skills.

How Does Talking Kids About Money Help?

Having conversations about money builds children’s confidence on the subject and helps to develop their financial skills.

Children who are encouraged to talk about money tend to do better with money when they grow up.

Do Children Learn About Money In School?

Financial education is taught as part of the secondary national curriculum in England, and the national primary and secondary curriculum in Wales, Scotland and Northern Ireland.

How To Teach Kids About Money

Think back to your education in personal finance. Did you learn about money management at home? At school? Through trial and error? When I talk to people about their own financial educations, I hear a lot about regret—regret that they didn’t learn the fundamentals sooner.

Unfortunately, many young people aren’t getting an education in the fundamentals of financial independence, such as budgeting, investing, and saving. According to the Council for Economic Education, in 2022.

1. Start with Basic Concepts – Teach Kids About Money

Understanding Money

Begin by explaining what money is and its purpose. Kids should understand that money is used to buy goods and services and that it is earned through work.

The Concept of Earning

Teach children that money doesn’t just appear magically; it is earned through effort and work. Explain the different ways people can earn money, such as through jobs, businesses, and investments.

2. Teach Kids About Saving Money

The Importance of Saving

Discuss why saving money is crucial. Explain that saving allows people to buy things they need or want in the future and provides a safety net for emergencies.

Setting Savings Goals

Help kids set short-term and long-term savings goals. Short-term goals can be small items they want, while long-term goals can include more significant purchases like a bicycle or a video game console.

Use Clear Jars or Piggy Banks

Use visual aids like clear jars or piggy banks to help kids see their savings grow. This tangible method reinforces the concept of saving and provides a sense of accomplishment.

3. Teach Kids About Budgeting Money

Simple Budgeting Techniques

Introduce the concept of budgeting by allocating a portion of their allowance or earnings to different categories: spending, saving, and giving. This practice teaches kids how to manage their money effectively.

Tracking Expenses

Encourage kids to keep a simple log of their income and expenses. This habit will help them understand where their money goes and how to make informed spending decisions.

4. Explain Spending Wisely – Teach Kids About Money

Needs vs. Wants

Teach children the difference between needs (essential items like food and clothing) and wants (non-essential items like toys and candy). This distinction helps them prioritize their spending.

Making Smart Purchases

Discuss the importance of comparing prices, looking for sales, and evaluating the quality of items before making a purchase. These skills will help them become savvy consumers.

5. Introduce the Concept of Giving

The Joy of Giving – Teach Kids About Money

Explain the importance of helping others and sharing their resources. Encourage kids to set aside a portion of their money for charity or to help those in need.

Involving Kids in Charitable Activities

Get kids involved in charitable activities, such as donating to a cause they care about or participating in community service. This hands-on experience teaches empathy and social responsibility.

6. Teach Kids About Earning Money

Chores and Allowances

Consider giving an allowance in exchange for completing household chores. This arrangement teaches kids the value of work and the concept of earning money.

Encouraging Entrepreneurship

Encourage entrepreneurial activities like lemonade stands, yard sales, or craft projects they can sell. These experiences teach valuable lessons about business and earning potential.

7. Introduce Banking Concepts To Kids

Opening a Bank Account

When appropriate, open a savings account for your child. This step introduces them to banking, interest, and the importance of keeping money safe.

Using Online Banking

If your child is old enough, teach them how to use online banking tools to monitor their accounts and understand the digital aspects of money management.

8. Teach investing Basics To Kids

Understanding Investments

Introduce the concept of investing and how it can grow their money over time. Explain basic investment vehicles such as stocks, bonds, and mutual funds in age-appropriate terms.

The Power of Compound Interest

Explain compound interest and how it helps their money grow faster. Use simple examples to show how saving and investing early can lead to significant financial growth.

9. Teach Practical Skills To Kids About Money

Shopping Skills

Involve kids in shopping trips and show them how to compare prices, use coupons, and make budget-conscious decisions.

Managing an Allowance

Give kids a regular allowance and guide them on how to allocate it wisely. This practice helps them learn to manage money and make decisions within a budget.

10. Lead by Example

Demonstrate Good Financial Habits

Kids learn by observing their parents and guardians. Demonstrate good financial habits, such as budgeting, saving, and avoiding impulsive purchases.

Discuss Financial Decisions

Involve kids in family financial discussions where appropriate. Explain your financial decisions and the reasoning behind them to provide real-life context.

11. Involving Kids in Family Finances

Financial Discussions

Include kids in age-appropriate family financial discussions. Explain the basics of household expenses, income, and budgeting. This helps them understand how money management works in real life.

Household Budgeting

Encourage kids to participate in creating the household budget. Assign them tasks like tracking grocery expenses or comparing utility bills. This involvement makes them feel responsible and teaches valuable skills.

Financial Planning

Discuss family financial goals and plans, such as saving for a vacation or a new car. Explain the steps required to achieve these goals and involve kids in monitoring progress.

Age-Appropriate Money Lessons

Elementary School (Ages 5-10)

Introduce Coins and Bills: Teach kids to recognize and count different denominations of money.
Savings Goals: Help them set small savings goals, such as saving for a toy.
Money Games: Use board games like Monopoly or online money games to make learning about money fun.

Middle School (Ages 11-13)

Allowance Management: Give them an allowance and guide them on how to manage it.
Budgeting Practice: Introduce a basic budget and involve them in simple family financial discussions.
Entrepreneurship: Encourage small entrepreneurial activities, such as lemonade stands or yard sales, to teach earning and profit.

High School (Ages 14-18)

Savings Accounts: Help them open and manage a savings account.
Part-Time Jobs: Encourage part-time jobs to learn about earning and managing a paycheck.
Advanced Budgeting: Teach them more detailed budgeting skills and the importance of tracking expenses.

Use Educational Resources

Books and Games

Utilize books, games, and apps designed to teach kids about money. These resources make learning about finance fun and engaging.

Financial Literacy Programs

Look for financial literacy programs or workshops for kids. Many organizations offer age-appropriate classes that teach essential money management skills.

Resources and Tools

Books

“The Berenstain Bears’ Trouble with Money” by Stan and Jan Berenstain
“Money Ninja: A Children’s Book About Saving, Investing, and Donating” by Mary Nhin
“How to Turn $100 into $1,000,000” by James McKenna, Jeannine Glista, and Matt Fontaine

Websites and Apps

PiggyBot: A virtual allowance app that helps kids manage their money.
FamZoo: A family finance app that teaches kids about saving, spending, and budgeting.
Khan Academy: Offers free resources and courses on financial literacy for kids.

Educational Activities and Games

Allowance Chore Charts: Use chore charts to teach earning and responsibility.
Savings Jars: Use labeled jars for saving, spending, and giving to teach money allocation.
Board Games: Games like Monopoly and The Game of Life teach money management concepts.

Teaching kids about money is an ongoing process that requires patience, creativity, and consistency.

By starting early and using age-appropriate methods, parents and educators can help children develop strong financial literacy skills that will serve them well throughout their lives.

Conclusion Teach Kids About Money

Teaching kids about money is a continuous process that evolves as they grow.

By starting early and reinforcing these principles through practical experiences and discussions, parents can equip their children with the financial knowledge and skills they need to thrive in the future.

The goal is to raise financially responsible and independent individuals who can make informed decisions about their money.

Children should start to learn about money from early childhood. Parents and carers have the most important influence on how children deal with money in adult life.

Teaching children about money helps them manage their own finances as they get older. There are lots of age-appropriate ways to do this by keeping it simple and making it fun.