There is no right age to teach your child about money. The earlier you start the better it is. Teaching kids about money when they’re young lays the foundation stone for growing up to be responsible money managers in the future. But it may not be as simple as it seems. Some parents feel that they do not have adequate knowledge about money to teach their kids, others just feel that they should not burden children from such a tender age about something as sensitive and important as money.
According to research done by the University of Wisconsin-Madison, about the behaviors and attitudes of fourth and fifth graders who were exposed to financial education, it was concluded that younger students can learn financial topics and that learning is associated with improved attitudes and behaviors which may result in increased financial capability later in life. Thus teaching your kids from a young about money is actually a good idea.
Lessons and activities divided by age
Educating children about money on the concepts of earning, spending, saving, borrowing, and sharing will make them responsible and they will learn to care about money. You can start from a young age and go step by step. There are many simple activities which you can adapt to teach your child about money.
According to a study done by a student of the University of Arizona, it was concluded that parents should teach their children about money through example, explanation, and applied practice. Although it’s tempting to shield your kids from everything related to money, it’s really important for parents to get money into kids’ hands early on so they can practice working for it, managing it, and learning how to spend it wisely.
Below given are activities that will help you teach your kids about money.
Preschool and Kindergarten: Ages 3 to 5 –
Why is it important?
- Children of 3 years old understand basic economic concepts.
- By age 7, kids have developed permanent financial habits.
- This is a good time to start explaining that material goods cost money.
Activities to teach preschool kids about money
1. Use a jar to save.
Using a piggy bank is a great idea to start. When they see their money growing they will be encouraged to save more. Yesterday, they had a dollar bill and five dimes. Today, they have a dollar bill, five dimes, and a quarter! Talk through this with them about this and make a big deal about it growing! The smile on their face and excitement in their eyes will speak volumes.
2. Set an example.
A study by the University of Cambridge found that money habits in children are formed by the time they’re 7 years old. The little eyes are always watching you and learning from you. If you’re slapping down plastic every time you go out to dinner or the grocery store, they’ll eventually notice. The way you use your money, save and invest, they will try to inhabit the same. So set a healthy example for them and they’ll be much more likely to follow it when they get older.
3. Show them that stuff costs money.
Sometimes you have to give in. Let them grab a few dollars out of their jar, take it with them to the store, and physically hand the money to the cashier. This simple action will have more impact than a five-minute lecture. They will know about the importance of money and what money can do So they will be more inclined towards saving money
Elementary School and Middle School: Ages 6 to 14 –
Why is it important?
- Your kid is mature enough to understand the value of money
- At this age, they would learn about compound interest and other stuff which they can use to explain the concept of money in the abstract.
- They will need the use of money in real life like in shops, grocery stores, etc.
Activities to teach middle school kids about money
1. Show opportunity cost.
The way that most parents use to teach kids about money. You can put a situation in front of them and ask them to choose. “If you buy this video game, then you won’t have the money to buy that pair of shoes.” At this age, your kids should be able to weigh decisions and understand the possible outcomes.
2. Give commissions, not allowances.
Don’t just give your kids money for breathing. Pay them commissions based on chores they do around the house like taking out the trash, cleaning their room, bringing groceries, or mowing the grass. This concept will help your kids understand that money is earned—it’s not just given to them.
3. Avoid impulse buys.
“Mom, I just found this cute dress. It’s perfect and I love it! Can we buy it please?” This is very common and happens around us all the time. This age group really knows how to capitalize on impulse buy—especially when it uses someone else’s money. So now is the point you should put a stop to it. So instead of giving in, let your child know they can use their hard-earned commission to pay for it. But encourage your child to wait at least a day before they purchase anything over expensive.
4. Stress the importance of giving.
Once they start making and saving a little money, be sure you teach them about giving and sharing. They can pick a church, charity, or even someone they know who needs a little help. Eventually, they’ll see how giving doesn’t just affect the people they give to, but the giver as well. This is a great way to teach kids about money. Sharing is caring! Teach them that.
High School: Teens Ages 16 to 19 –
Why is it important?
- By this time your child is capable of understanding more sophisticated money management concepts and has a level of financial literacy that includes knowledge of earning, saving, spending, and sharing at the very least.
- Credit card companies target college students, so you’ll also want your child to be aware of the dangers of maxing out credit cards, how interest works, credit limits, and the importance of building credit responsibly.
- What they learn at this stage will shape their future.
Activities to teach high school kids about money
1. Teach them contentment.
This is a phase where your kids will get lured by the outside things. They can scroll through social media, compare their belongings, or even get provoked by total strangers. Contentment starts in the heart. Teach your kids to be satisfied with what they have.
2. Responsibility of a bank account.
By the time your kid’s a teenager, they should at least be able to set up with a simple bank account. If you’ve been doing some of the above along the way, it’s time to stop and let them take the responsibility. This takes money management to the next level and will prepare them for managing a much heftier account when they get older. They will learn the technicalities along the way.
3. Teach them to steer student loans.
Sit down with your kids and talk with them about the student loans. Let your teen know that student loans aren’t an option to fund their education. Talk through all the alternatives out there, like going to community college, going to an in-state university, working part-time while in school, and applying for scholarships now.
4. Teach them the danger of credit cards.
As soon as your kid turns 18, they’ll surely get hounded by credit card offers. If you haven’t taught them why debt is a bad idea, they’ll become yet another credit card victim. They must know what they are asking for when they think about getting credit cards. Remember, it’s up to you to determine the right time you’ll teach them these principles.
5. Help them figure out how to make money.
When you think about it, teenagers have plenty of free time—fall break, summer break, winter break, spring break. Help them get a part-time job, work anywhere, freelance, or even have a start-up. You just need to tell them to be independent. That’s the way they will learn how difficult is to earn and why they should use it wisely.
These are some of the simple ways to teach kids about money. You can incorporate new ways as per your wish. But make sure to teach them.
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