How to Teach Kids about Smart Money Management

How to Teach Kids about Smart Money Management

Most parents excel when it comes to teaching safety and good manners, but with money, few know where to start. However, parents can do their kids a big favor by giving them the knowledge to manage money responsibly. Teaching kids about the importance and management of money at an early age will help them manage it better when they reach adulthood. With little being taught at schools, the whole responsibility is up to parents to find effective ways how to handle money responsibly. If you don’t teach them basic money values at home, they may run a greater risk of making bad final decisions as a grown-up.  

For your help, we’ll show you how to give your kids a head start and set them up to win with money at any age.

How to teach Kindergarteners about money

If you are one of those who never talk to their kids about finances, you have to do it now. Children can indeed learn about money early in their lives. They must learn basic money values at home.

  • Use the piggy bank to save

Using a piggy bank or a clear jar is a great idea so that they can have a visual ideal that their money is growing. A few days ago, they had a dollar bill and two dimes. Now they have a dollar bill, six dimes, and a quarter. You can discuss it with them and make a big deal about it increasing.

  • Set an example

According to a research study, money habits in kids are formed by the time they are seven years old.  Kids are watching you, so whatever you do, they will eventually notice. If you and your partner are arguing about money, they will observe that too. You have to set a healthy example for them. They are more probable to follow it when they get older.  

  • Show them that stuff costs money

You have to do more than just mentioning the prices of different items or their favorite toys. Allow them to take some dollars out of their piggy bank, take them to the store, and let them hand the money to the cashier. Let them spend their money on what they wish and allow them to make mistakes to learn from the costs. This practice will have more influence than a five-minute lecture on money management.  

How to teach elementary and middle schoolers about money

  • Show the opportunity cost

This is another way of saying, “If you buy this toy, then you won’t have enough money to buy that dress.” This way, your kid will be able to weigh choices and comprehend the possible outcomes.

  • Give commissions

You can pay your kids based on the chores they do around the house. This could be as simple as cleaning up their toys. For instance, they can take out the trash, clean their room, or mow the grass. They have to understand that money is earned; it isn’t just given to them.    

  • Avoid impulse buys

“Dad, I found these pair of shoes. I love them. Can we buy them, please?” You must have heard such statements many times. Kids of this age know how to capitalize on the impulse buy, especially when they are using your money. Let them know they can spend their hard-earned money to pay for it. Encourage them to wait at least a day before they buy anything over $20. This way, they can make a better money decision with a level head.     

  • Stress the significance of giving

Once they start making money, the next important thing they have to learn is the importance of giving. They can pick a church or someone who needs help. Consequently, they will learn how giving can affect both the people they give to and the giver.  

How to teach Teenagers about money

  • Teach them contentment

Your teens must be spending most of their time staring at a screen while scrolling through social media. And when they are online, they are seeing the highlight reel of their friends, family, and even strangers. It is the quickest way to bring on the comparison trap.

“Mom, my friend got to spend $5,000 on her birthday part. I want to do the same.”

“My friend’s parents bought him a brand new car. Dad, I don’t want to drive this old car anymore.”

Serenity starts in the heart. Let your teen know that they can still through a birthday party without spending this much money, and their old car is still running enough to get them from point A to point B.  

  • Give them the responsibility of a bank account

You must set your teen up with a simple bank account. This takes the smart money management to the next level. By the time they get older, it will be easier for them to manage a heftier account.

  • Get them saving for college

It is the best time to have your kids start saving for college. Help them find a part-time or a summer job. Take a portion of their earnings and toss it to their college savings account. It will give them an advanced level of satisfaction that they are contributing to their education.   

  • Teach them the danger of credit cards

As soon as your kid turns 18, they will get hounded by credit card offers. You have to tell them why debt is a bad idea; otherwise, they will become a victim of credit cards. You can determine the right time to discuss these things.

  • Get them on a simple budget

This is the best time to help your teen to develop a habit of budgeting their income. They should know the significance of making a plan for their money. Since they are always glued to their devices, they can use simple budgeting apps, too.

  • Help them figure out ways to make money

If your teen wants to make money, help them find a job. They can work during their fall break or summer break. Give them some creative ideas to earn money.