Smart Ways to Teach Your Kids About Money

Teaching your kids about money gives them the head start that perhaps you didn’t have as a child. You may have noticed that your relationship with money is closely tied to your youth and watching your parents’ behaviors and beliefs about money. As you journey through a healthy relationship with your budget and spending habits, there are healthy ways to incorporate those lessons early on with your kids.

We’re going to show you some excellent ways to teach kids how to have awesome habits with money and set them up for success.

Use a Clear Jar when Saving

While piggy banks are fundamentally a great idea, kids don’t really see what’s going on inside of the piggy bank as their savings grow. By using a clear jar, you can participate with them and celebrate with them as they count their savings and watch it grow before their eyes.

Don’t Tell Them, Show Them

Instead of telling them how much an item costs, take the time to provide the physical dollars and cents to have them complete the transaction, allowing them to count out the total due. This will leave a much longer lasting, tactile impression, than a discussion about how much something costs.

Set the Example

While your children watch you, it’s likely their money habits have been formed by age 7. If you have a preschooler or kindergartner in the family, they’re learning how to relate to money through your example. If you use a debit or credit card to make all of your payments, they’ll notice you pay with plastic. They’ll also notice any arguments between you and your partner.

Make it a focus to set the example- for instance, if you want them to pay close attention to their spending as they get older, try counting and paying for things, like a dinner, in front of them so they can see the process of making thoughtful and calculated purchases.

Teach Them About Opportunity Cost

As your children get further along in elementary school and middle school, they can begin to weigh their decisions and understand that their decisions have multiple outcomes. Teaching them how to make purchases and understand that making a purchase may eliminate the money for the other things they want, will help them understand that on the other side of every opportunity, is a cost.

Teach Delayed Gratification

Older kids will still have habits of wanting something and wanting it right now. If your child sees a shiny toy that catches his eye, it’s likely he’ll ask if you can buy it for him right then. Instead of caving, teach him to wait a day to make that purchase. This valuable lesson will let him know that not only will the toy still be there tomorrow but that he may not be so excited about spending his hard-earned allowance on it.

Teaching children any lifelong valuable lesson takes time, and money is no exception. But if you’d like for them to successfully handing their money as they get older, taking a preemptive approach and laying the foundation now will be well worth it.