How to Teach Your Child the Value of Money
Wouldn’t it give you peace of mind to know you’re passing good money habits along to your child? Many of us were never taught the value of money. The problem is your kids are learning about money whether it’s intentional or not.
The money behaviors your child observes and learns in childhood will shape their attitudes and future money habits. By the early age of 7, many of your child’s money habits are set.
Your job as a parent is to teach your kids financial responsibility. Learning basic money skills and concepts such as patience and delayed gratification can mean the difference of raising financially savvy kids or not.
Lead by example
Kids are constantly getting messages about money in the home, through the television and the media. They are highly perceptive and internalize the spoken and unspoken messages they receive.
How do you speak about money? What do you say about it? Do you have an abundant or scarcity mindset towards money?
Let your children hear you talk positively about money. Encourage your child to express gratitude for the little things in life.
Teach your child to count money
It may be a while before your child is able to add up dollars and cents but start by teaching them the basics:
- Identify coins, pennies, nickels, dimes and quarters.
- Have them sort coins into like piles.
- Start with counting pennies. Once they’ve grasped that concept throw in a nickel.
- Play a matching game. For example, this pile represents $0.25 and this pile represents $0.10.
- Once your child is able to skip count (10, 20, 30) they’ll be more able to count money.
Include your children in small financial decisions
Take advantage of teachable moments. Find a way to share a lesson about money throughout your everyday experiences. If you typically shop with a credit card let your kids see you shop with cash. It’s easier to understand the concept of money going in and out.
Let your child see you interact with money. Make it visual. Let them see you pay with cash, write a check, pay a bill or deposit money at the bank. Explain how it works and why it matters. Include your child in everyday activities such as paying at the grocery store or tipping at a restaurant.
Every child’s development is different so start with simple and basic concepts they can grasp.
Have your kids earn money
It’s important your kids understand where money comes from and what you can do with money. Show them how you earn money and let them earn money too.
Give your kids an allowance but don’t tie it to chores they should already be doing around the house. If your child expresses an interest in more spending money suggest they start a lemonade stand, walk a dog or rake the neighbors leaves.
Show them how to save
When your child is little a piggy bank is a great way to teach them how to save money. When you see money on the ground let them pick it up and give them your spare change so they can watch it grow. Encourage them to save up for something so you can teach them that stuff costs money.
Once they are older, open a bank account for them. Let them put the money they’ve saved into the bank.
Teach your kids how to spend and save wisely by letting them do both. Help them understand the benefits and consequences.
Teach them ways to pay
Start teaching your kids the most basic methods of payment such as paying with cash, credit card or a check. Help them understand the concept behind each one of them.
If you’re paying with a credit card explain what it means and the dangers of it. Kid’s should like money not fear it but they should also be aware of the consequences.
When kids are older you can begin to share concepts such as pre-paid debit cards, PayPal, bank transfers, automatic payments, bitcoin, Apple pay and apps like Venmo.
Needs vs. wants for kids
Teach your child the difference between needs and wants. They need things that make their life more comfortable. A bed to sleep in, a toothbrush and clothing.
They “want” things that are not essential for everyday life, such as a new lego, doll or game.
Encourage your child to save for something they “want”. Help them set a goal to buy a certain item or save a certain amount. Create a chart or worksheet similar to what we would use so they can see their progress.
I think it’s important to teach your kids to enjoy money; earning it, saving it and spending it. It’s important for them to know they are safe, secure and supported in this world. Teach them that money is a tool that can be used to make their life easier.
Do you have any tips for teaching kids the value of money? Leave them in the comments below!