Teaching kids about money is important and it isn't as hard as it may seem. It's actually something parents can do every day.
"Turn your day-to-day activities into learning experiences," says Jayne A. Pearl, Massachusetts-based author of Kids and Money: Giving Them the Savvy to Succeed Financially.
Trips to the bank, store, or ATM machine, for instance, can be a perfect opening for a discussion about your values and how you use money. When children are very young, you can work money concepts into your child's imaginary games, like playing pretend store or restaurant.
Read on for some fun, simple ways to teach your kid about money.
How to Teach Kids About Money Before High School
TeachingAges2and3AboutMoney
Very young children won't fully understand the value of money, but they can start getting introduced to it. A fun way to do this is to learn the names of coins. One way to do this is to play the coin identification game. You and your child can trace around the outside of various coins and color the shapes. Then invite your child to match the coin to the image while discussing each one's name. (Note: Toddlers may try to swallow coins, so always provide close supervision.)
Young kids love to play store, but an imaginary shop in the living room is more than just a fun way for your child to exercise their imagination. By exchanging play money for goods, your child begins to understand the basics of commerce, says Dorothy Singer, Ed.D., a senior research scientist at Yale University in New Haven, Connecticut. Use cereal boxes, fruit, sponges, or paper towels as store items. Together, make pretend money and shop till you drop.
TeachingAges4and5AboutMoney
Before heading to the supermarket, ask your preschooler to help you clip coupons. (Don't forget to use safety scissors.) When you're at the store, hand them the coupons and ask them to keep an eye out for the products. This will make them feel like they're helping, and it's an easy and fun way to talk about saving money, says Neale S. Godfrey, chairwoman and founder of the Children's Financial Network in Chester, New Jersey.
Most preschoolers would rather playimaginary restaurantat home than go out for dinner. It playfully promotes a variety of skills, such as setting the table, learning good manners, and making change. "Many 4-year-olds have to be reminded after the pretend meal that they have to pay the bill," says Dr. Singer. "But once they understand the concept, they get very excited about paying with pretend money or making change as the cashier."
TeachingAges6and8AboutMoney
Kids between the ages of 6 and 8 may start to understand how money works. "As soon as your child is receiving an allowance, he'll need a place to put his money," says Pearl. Make a trip to the bank an event. Help your child open a savings account, and encourage them to make regular deposits. As the balance grows, you can discuss the concept of interest and how the bank pays people back for saving their money. Many banks have children's accounts that offer no-fee and no-minimum-balance accounts.
This is also a good age to take up coin collecting as a hobby. (You can spark your child's interest with state quarters.) Visit the kids' section of the United States Mint website with your child and learn about the evolution of U.S. currency. You'll also find online games and cartoons to keep your child engaged.
TeachingAges9 to12AboutMoney
Between the ages of 9 and 12 is a good time to get kids thinking about the value of money. One way to do that is by comparison shopping. Read the store's price labels with your child, look at the size and price, and compare the bulk amount per cent. Don't forget to take quality into account. For example, one week, buy brand-name paper towels. The next week, try a generic brand. Then, discuss the differences and decide together if the brand name is worth the extra cost.
The all-American yard sale has you annually cleaning out your attic, garage, and child's closet. This year, put your child in charge. With some supervision, preteens may take to this project like ducks to water. They can handle much of the responsibility while learning about setting a value, making decisions, and helping you haggle with customers over prices.
A Parents' Guide to Teaching Teens About Money
TeachingAges13 to15AboutMoney
When kids hit the teen years, you'll want to start teaching them to budget. Between lunch money, school supplies, and other small necessities, allowance can go very quickly for young teens. Help your child set a budget by first discussing wants vs. needs. "I call it the potatoes and gravy game," says Pearl. "Potatoes are food we need to survive. The gravy makes it taste better but isn't necessary." You can reinforce this idea by going over the family budget with your child and discussing your family's needs vs. wants.
A child's early teen years are also not too early to learn about the stock market. You can pretend to invest in companies your child is familiar with, like Disney or Mattel. Make it a family activity by having each member pick a stock, suggests Godfrey. Then read the paper or watch the financial news together, and discuss how the stock values of everyone's choices fluctuate.
Make Charity a Money Lesson
"With a little encouragement," says Godfrey, "giving to charity can become part of your child's mentality." In fact, donating can be more than a financial lesson; it can teach social responsibility.
Help your child pick five charitable organizations that interest them. To decide which is worthy of your hard-earned dollar, make it a family project to find out what they do, how well they do it, and what percentage of the donations goes to their cause.
TeachingAges16 and UpAboutMoney
As you continue all the previous lessons with your kids, older teens will need to put it all into practice. Stored-value cards, such as Visa Buxx, are simple tools that parents can use to teach lessons in financial responsibility, according to Pearl. Teenagers can use these buying cards to pay for things without using cash or credit cards. Parents load the cards, which look like credit cards, with a set amount of money and then let their teens budget their allowance. (Ask your lender about possible annual fees.)
