Tips for teaching young kids about money

The sooner kids learn money skills, the better it is for their financial future. You want to make sure to instill the importance of saving and spending wisely as soon as possible. Some parents prefer to let the teachers take over the money lessons, but opening up financial discussions at home can be incredibly worthwhile. There are several easy ways to teach your young children financial lessons that can stick with them throughout their life.

Teach them the value of each piece of money

From coins to dollars, make sure your children know the value of each piece of money. They'll learn it in school as well, but it doesn't hurt to get an extra lesson at home. Put out a dollar and ask them to show you how many quarters it takes to equal the same amount. Throw a handful of coins on the table and ask them to count how much is there. All these little lessons can be valuable for building up their money and math skills.

Use real life experience

One of the best ways my mother taught me about money that I still remember to this day is by taking me to a store and asking me how many coins or dollars I needed to purchase a certain item. For example, if there was a pack of candy I wanted, she would ask me what money I had to use to total up to that item. It helped me learn quickly the value of what I wanted rather than if I had seen her just throw the candy into the pile of other items she was purchasing.

Discuss an allowance

Some parents are against giving their kids an allowance for doing chores around the house while others are all for it. Obviously the decision is all yours, but the allowance conversation is bound to come up at some point. Rather than decide on your own what the child should do to earn the money, consider discussing it with your child. Hear them out on what they think they should do and the two of you can come to terms about it. Even the youngest kids are capable of discussing the terms.

Teach them about budgeting

An easy way to start teaching kids about budgeting is to get them involved in your own budget. For example, head to the grocery store with a small list of items, set a budget and tell your child you have to stick to that amount. Bring him along and let him help you calculate each item you put in the basket. Test him out by grabbing an extra item and putting it in the cart, then ask him to continue with their calculation and see if he notices that you're over the limit.

Give them access to a piggy bank

Most piggy banks will have a way in, but require breaking or cutting to get the money out. While this helps kids save money, it doesn't particularly teach them the willpower to not spend it. Decorate a coffee can as a piggy bank and cut an opening in the lid. You and your child can set a goal amount and every once in awhile, count out the coins and dollars to see how close to the goal he actually is. It's a great way to teach him willpower while he builds up toward a specific goal.

Let them earn their money

I started from a young age doing odd jobs - pet-sitting, snow shoveling and babysitting - that helped me bring in extra money. It's a great way for kids to earn their own funds and learn responsibility. If your kids come to you with an idea of how to earn extra money, even if it's something simple like having a lemonade stand or selling crafts online, consider the idea regardless of how young they are. They'll certainly learn the value of hard work.

Some think that little kids don't need to learn a lot about spending and saving money, but it's great for them to learn lessons about finances as early as possible. These lessons will stick with them right into adulthood and the more prepared they are, the better.

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