In the age of plastic and Internet payments, it’s difficult at times to teach your kids the value of a dollar. However, learning about money can be fun and rewarding if it’s approached the right way. If you’re looking for fun and unique ways to teach your kids about money, the following seven steps will get you started.
Financial expert Dave Ramsey stresses the importance of teaching kids that budgeting comes down to choice. A kid who wants to go to a concert and to buy school clothes must sometimes choose between the two. Kids need to know what it’s like to have to choose between items on their budgets.
2. Don’t Be Abstract
An article in U.S. News and World Report tells parents not to be abstract. In other words, don’t use plastic to pay for things. Kids, especially younger ones, don’t understand paperless money. Take out cash to pay for stuff. Set an example for them buy paying cash so they can see where money goes. When they get older, go even further by discussing your budget with them. That allows them to make the connection between the $30 lunch and money coming out of the $150 fun allowance.
3. Encourage Saving
Eventually your kids will need to know about banking and savings and all the grown-up things that go with being an adult that handles money. One practical way to teaching your kids about this is to help them open a savings account. Try a credit union like NASA Credit Union for this one, because often credit union savings rates are lower than they are at a regular bank. This means that your child can start with as little as $5 without being penalized for not having more in the account. At the same time, he/ she learns how the world of banking works gradually, which is one of the best ways to instill life-long savings habits.
4. Let Them See What It Looks Like
The toy and grocery stores are filled with temptations for kids. Instead of getting angry or frustrated when they want that toy, ask them to bring their allowance money with them when they shop. If they want a movie, ask them to pay for it. If they’re short, explain by how much and how many more chores they have to do to earn the allowance to pay for it. The tune changes when they see their money going away or when they have to calculate how many more hours of work they’ll have to do in order to buy that item.
5. Change Their Piggy Bank
In the old days, piggybanks had just one slot for coins at the top that was maybe big enough for dollar bills if you folded them. The problem with those was that all the money went to the same place. Nowadays, you can find piggybanks that have individual slots for categories like investing, spending, savings, and donations. This gives them a better idea of the various ways people use their money.
6. Make Charts
To encourage kids to save, why not make a chart with their goals on it? For example, maybe they’d like a new bike for the summer. After you take them to the store to show them the different kinds, go home and make a savings chart/ graph. Help them color it in as they put money away for the bike. Being able to see their money and their progress helps encourage them.
7. Do As I Do
It’s an old saying, “Do as I say, not as I do.” However, when it comes to money, this can be detrimental to kids and their future finances. If you’re always short money or constantly buy on credit, those are the lessons that your kids will eventually learn. You need to be a good money manager in order to teach your kids to become good money managers.
Money doesn’t actually have to be complicated. Most of the time it comes down to the habits we learn to keep. Kids have a better chance of creating a lifetime of good money habits if they start young. These seven steps are just some of the ways you can help your child instill good money habits into his or her life.