9 Tips to Teach Kids About Money
One of the most beneficial life lessons you can teach your kids is how to manage their own finances. Not only does it teach them responsibility but it can empower them to save, spend wisely, and invest in their future. It’s never too early to start the conversation. We have tips for you that can help your kids develop good money habits starting from age 3 and up.
1. Start at an Early Age
- Ages 3-5: Use basic concepts like identifying coins and bills and explaining that money is used to buy things.
- Ages 6-10: Talk about saving, spending, and the value of money. Use jars or piggy banks with real coins or valuable items.
- Ages 11+: Introduce topics like budgeting, interest, credit, and investing.
2. Encourage Questions
- Create an open environment where your kids feel comfortable asking questions about money. Be as honest as you can while providing age-appropriate answers.
3. Lead by Example
- Kids learn a lot by observing how their parents handle money. Talk through age-appropriate money matters, like how to compare prices and make choices based on budget.
- Explain why you do or don’t make purchases about things including electronics, clothing, or toys.
4. Use Free Resources, Games, and Activities
- Play games like Monopoly or The Game of Life to teach money management.
- Introduce child-friendly games or apps that help teach financial literacy.
5. Teach the Value of Work
- Tie what they can earn for allowance to chores to help them understand the relationship between work and earning money.
- Encourage older kids to take on activities like babysitting, lawn mowing, or a part-time job to earn money.
6. Discuss Needs vs. Wants
- Help kids understand the difference between needs (like food and clothing) and wants (like toys or games).
7. Introduce Banking Basics
- Open an account for your child, like a Key4Kids® savings account. Walk them through each deposit and withdrawal and how it impacts the balance.
- Teach them about interest, both how it can grow their savings and how it works when borrowing money.
8. Discuss Long-Term Planning
- Talk about financial goals for the age your kids are in. For example, saving up for a new toy or bike for kids who get an allowance and buying a car or saving for college for older kids with a part time job.
9. Take Skills Into the Real World
- Let your kids help make decisions about money at the grocery store. You can teach them to find the value of a purchase by figuring out the cost per ounce, for example.
- Set up an allowance for them to manage. Ask them to divide their earnings into categories like spending, saving, and donating.
By introducing these tips and involving kids in real-life financial decisions, you can help them develop a solid foundation in financial literacy.
It’s never too early to start saving. Learn more about our Key4Kids savings account, the perfect account for beginners.