As your children get older and head out on their own, knowing how to budget money is crucial, which is why it’s important to teach kids about money from a young age.
Though there is no foolproof way to go about developing financial literacy for kids, there are many tips and tricks parents can pick up along the way that will help. If you’re feeling lost about teaching your kids about money, these tips are great for parents of children of all ages.
Teach Kids About Money
Placing an emphasis on the importance of earning one’s money is a great way to teach your children about money and its value. Many families develop an allowance system at home based on weekly or monthly chores your children complete. While most families have a chores system in place for their children, it’s easy for the process to become overwhelmed by a busy schedule. First and foremost, stay organized; a great way to combat an organization problem is by creating a chore chart at home that you can update weekly. Whether you purchase one separately or DIY with an old white board, the chart will help you keep track of all the things your children have done throughout the week. This process will teach both consequences and rewards in a concrete way. Teach your kids that hard work will pay off in the long run, and encourage them to save what they’ve earned by setting goals with them for certain purchases they hope to make.
Pay with Cash
Though paying with cash nowadays is a bit uncommon, choosing to pay with cash as a visual learning tool for your kids is a great way to teach monetary value. Children are concrete learners and better understand the concept of money when they see actual money change hands. When you find yourself reaching for your credit card every time you go out to eat or pay for your groceries, your kids might have less of an understanding of how much things cost in the long run. Allow your children to see how much cash you actually need in order to purchase items. Take turns with your partner to alternate paying for things so that your kids also understand that payments and bills are a responsibility everyone has.
If you’re not too keen on carrying cash all the time, use money games for kids at home that will better help them visualize and understand the value of money. Whether you play pretend with a toy cash register or you alternate who’s the banker the next time you start a game of monopoly, there are endless ways to make counting money both educational and fun.
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- Best Budget Worksheet for Graduates
How Do You Explain a Budget to a Child?
Give them a budget
A fun yet more challenging option to truly put your kids’ money skills to the test is by giving them a budget the next time you go clothing or grocery shopping. Allow them to take the reins on the purchases with your supervision. Whether you make a day trip out of it or you let them fill up a virtual bag at an online store, be sure to show them how each item can add up quickly. Use the opportunity to discuss money and your family values about money.
When purchasing, encourage your children to compare all prices first. A great way to set an example for both saving some cash and saving our planet is to encourage your kids to purchase from a thrift store. Thrifting is growing steadily in popularity and in turn is having an impact on the amount of items that end up in landfills. Show your children the difference in purchasing all new items and choosing thrifted items. Your older children might be surprised at the name brands they can find for less when they look for gently used back-to-school styles both in-store and online. For example, teens can find fun Lularoe looks for great prices at online sites like thredUP. You can even take your younger children out to a local thrift store the next time you give them a budget and make a game out of who can find the best, most affordable, previously owned item.
Explain Your Purchases
Take advantage of the opportunity to model responsible financial behavior to your children in every day situations. Everything you do, including what you purchase, is being observed by your children. While this may seem obvious, in the busyness of life, it’s easy to lose sight of the fact that your kids are always watching and learning from your behavior. Explaining your purchases to your children and always being mindful of what you spend your money on are the best possible ways you can teach your children about money. When your child asks for a name brand item at the grocery store, compare it to the store brand option with them. Be sure to explain how they can get almost the exact same ingredients and save money. Explain your thought processes in every day purchases to help your child learn the balance of factors you consider in spending your money.
Refrain from making impulse purchases in front of your kids when you’re in the checkout aisle. When asked for an item by your children, make them aware of how impulse buying can become a dangerous habit. At the end of the day, money transparency with your kids is crucial to teach financial literacy to kids. While you don’t need to go into detail on how much you pay for your electric bill each month, being more open about money will ensure that as your kids get older they will have a firm grasp on the cost of living and the importance of budgeting. Knowing how to teach kids about money is an important skill for parents of children of all ages.
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