8 Ways to Teach Your Kids About Money Management

The relationship each of us has with money starts at a very young age. How we are taught to budget, save, and spend money as children can make a huge impact on our habits as adults. 

With that said, teaching children about money is complex! Here are a few tips and strategies for teaching your kids about money.

1. Be open about costs and expenses

For many children, understanding how much things actually cost can be difficult. Start talking about the cost of everyday items such as groceries, toys, and clothing. This will help your kids develop an understanding of what money translates into.

2. Help them visualize saving

Having a visible indication of how much your children (or your family) are saving can help kids understand how much progress they are making. Using a clear jar rather than a piggy bank or investing in a savings chart can help children to visualize the progress.

3. Practice budgeting

Want to teach budgeting skills? Have your kids set price ranges for gifts they want to purchase for others, and then take them shopping for those gifts. 

4. Teach them to categorize their money

Once your kids understand the basic concepts of savings and budgeting, show them how to categorize their money. This serves as an early practice in bank account management. You can do this visually by having kids separate their money into envelopes labeled “savings,” “fun money,” “gifts,” and “charity.” This helps them understand how money can be split among various priorities.

5. Promote earning money rather than setting an allowance

Try setting a “rate” for different tasks around the house, while still stressing the importance of regular home maintenance tasks. For example, making your bed is a regular maintenance task, cleaning the mirrors can be a $1.00 task, and vacuuming the stairs can be a $3.00 task. This way, kids learn that money is earned rather than given.

6. Have them set financial goals (ex. a snack or toy they save up for)

Helping kids figure out examples of what they can buy with their hard-earned money can be a powerful lesson. Encourage children to make financial goals, no matter how big or small, which can help them to make long-term saving goals in their adult lives.

7. Practice comparison shopping

Explaining the difference between wants and needs while shopping for items with children can help them to be less impulsive in their future spending habits. These practices can also help children search for deals.

8. Normalize waiting for things they want

For children, wanting things can lead to feelings of jealousy, anger, and sadness. By normalizing the waiting process that saving requires, children will view saving as a skill rather than a chore.

There’s no set way to teach children about money. Each of these tips can be used to create a system that works best for you and your children! I’d love to hear your input into what works for your family.

Sources:
https://www.incharge.org/financial-literacy/resources-for-teachers/financial-literacy-for-kids/

https://www.daveramsey.com/blog/how-to-teach-kids-about-money