Teaching Kids About Money: 5 Fun Ways to Learn About Finances
Do your kids think money grows on trees? Try these 5 fun ways to teach them about money!
You want your kids to grow up to be financially savvy, but they aren't born with money smarts. In fact, most kids act like money magically appears in your wallet -- as any parent who has heard her child beg for the latest spaceship model or character from her favorite movie can attest.
Fortunately, even young kids can learn the value of a dollar. "It is never too early to start teaching kids about money, interest, savings, taxes and investing," says Anthony Humpage, CEO of Legacy Education Alliance, Inc., a provider of financial education training. Here are five fun ways to teach your child about money:
- Talk About Money
Every time you use the ATM or hand over cash to buy groceries, your child gains more of an understanding about money. Use these daily experiences to talk to your kids about how money is traded for things. "Talking about money is taboo, but parents have to open up a dialogue with their kids about it," says Danny Kofke, author of "A Bright Financial Future."
Use each and every opportunity you can to demonstrate the value of money to your child. Let her see you paying bills, such as the mortgage or the electric bill, and explain to her what that means. You can even introduce the concept of money in your playtime with your child, such as setting up a pretend food store in the living room.
- Give an Allowance for Chores
According to Kofke, kids as young as 3 can be given an allowance for chores. "Chores teach kids about managing money and help them understand the value of work," says Kofke. He recommends keeping a chore chart with simple tasks, such as putting away toys or making her bed. If the child does everything on the chart at the end of the week, she earns one dollar.
- Teach Kids a Three-Jar System
Next, teach kids what to do with that money once they've earned it. Kofke recommends keeping three glass jars labeled "save," "spend" and "donate." Designate a percentage of your child's earnings to go in each jar. (For example, 10 percent of the money she earns goes in the donate jar, 25 percent in the savings jar and the rest in the spending jar). Then break your child's dollar allowance into two quarters, two dimes, two nickels and 10 pennies and help her count out the correct amount to place in each jar.
Whenever your child goes to the store and sees something she wants to buy, remind her to check her spending or savings jar to see if she has enough. Use the donate jar to help your child understand the value of giving back to those in need.
- Play a Money-Savvy Game
You can find a ton of age-specific money games for kids online. Sesame Street has a variety of fun videos and games that teach youngsters about spending, sharing and saving money.
Older kids enjoy perennial favorites, such as Monopoly and Life, which allow them to make their own financial decisions and learn from their mistakes. Humpage also recommends CASHFLOW for Kids, which even includes elements of investing and debt.
- Set a Great Example
Kids are like sponges and understand more than you think. If you use a credit card at every purchase or argue with your spouse about money, they'll notice. The best way to teach your child about finances is to set a great example.
"Learn financial responsibility yourself, and your children will follow your actions," says Humpage. Create financial stability for your family -- and be the best example you can be -- by placing a high value on hard work, living within your means and making saving a priority.
Teaching kids about money isn't hard. In fact, it's really easy for kids to pick up ideas about finances -- and not always in a good way. "If they don't learn it from you, they'll learn it from their friends or advertisers and it won't be the message you want to send," says Kofke. So open up a dialogue and introduce a few fun activities to help give your little one a head start to a bright financial future.
For more tips on raising great kids, check out these 9 Tips for Teaching Kids Responsibility.
Rebecca Desfosse is a freelance writer specializing in parenting and family topics.
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