The modern American family lives at a very fast pace. With many having two working parents, time together is precious and it’s quite easy to take certain teaching moments for granted.
One thing that many parents may not always give time to is educating their children about money. After all, math is something that kids can learn in school. But money education is more than that, and it’s crucial for your kids to learn about money at an early age — almost as soon as they can count!
If you teach them what you’re doing, they’ll feel included and capable, and they’ll understand why you work, budget, and spend the way you do. It’ll also make them understand more complex financial concepts much easier later on, including the reality of inflation and how to prepare for it with investments.
These benefits can lead them to a brighter future, one that is hopefully financially secure. And with that in mind, here are some ways you can easily teach money basics to your kids.
Play “Money” Games
Gather your family around your favorite board games, like Monopoly or Life, and let your little ones unleash their inner mogul. This will make the concept of money fun and interesting for your kids.
Take Them Shopping
Take them to a grocery store and teach them about budgeting. You can set a game that involves buying items from a list, under a fixed amount. Tell them what coupons are for, and make them spot items on sale. Give them a simple calculator and teach them how to calculate how much you save with each smart purchase.
Give Them an Allowance
One way many parents teach their kids about money is through allowances. However, there’s no single correct way to give allowances, and it all depends on your financial situation, what your kids know about money, and what attitude you want them to adopt. Some parents might treat allowances like a guaranteed basic income, while others monetize chores to teach kids about the value of hard work. What matters is you pick a strategy addressing what you want your kids to learn about money, be consistent, and recognize every moment — such as a question, a bill payment, or a paycheck — as a teachable one for your kids.
Encourage Them to Save
Piggy banks or jars are a good start, but having several different options is an even better idea, so they can divide their savings for things like safekeeping, spending, and giving to charity. This teaches them how to manage their daily or weekly allowance wisely.
Take Them to the Bank
Once they’ve practiced the piggy bank experience well enough, it’s time to take them to a real bank. Opening a savings account for them gives you a chance to teach them how their money can “grow,” compared to just sitting at home in their piggy bank.
Teach Proper Money Talk
Discuss family finances with your kids in a simple way, but discourage them from sharing your house cost or salary to their friends. Also, explain that it isn’t polite to ask other people about their family’s finances.
Curb TV and Internet Time
While you can't control how much advertising your child is exposed to on TV or the internet, you can put a limit on how much media time they have each day. This is a good start for learning about the notion of wants versus needs.
Explain ATM and Credit Cards
Telling your kids about how money doesn’t just come out of ATMs when you need it, or how you can’t just pay for anything with a credit card, is a good start in teaching them about debit and credit. Learning about these concepts early will help them get ready for credit cards or loan responsibilities in the future.
At the end of the day, your financial behavior will always set an example for your kids, so it’s important you set a good one. It's imperative to always put purchases into context and emphasize how material things aren’t what make people truly happy. Remind them that some of the most valuable things in life — like spending time with family — are free! And it’s always good to teach them the concept of generosity.
Written for uwmc.org by Jane Brelle