Four Strategies to Use When Teaching your Child about Money
While parents can feel strapped for time and money around the holiday season, or really any season… shopping season provides a great opportunity to explore money-talk with your child.
Today we’re tackling 4 strategies you can use to teach and talk about money with your kids.
Have Them Set a Simple Goal And Use A Glass Jar For Saving Up
Whether it’s a recycled mason jar or pasta sauce jar, having a clear jar (so they can see their progress) can help young people visualize things like saving and spending. And having a child set a short-term money goal (We don’t want them to get discouraged after saving up for that bike for years…) can drive the point home even more. Perhaps saving for a small toy or favorite box of cereal for younger children or a shirt or pair of shoes for slightly older children. Taking time each week to count the money, add any more to that count, and finally taking money out to buy the prized item can all have a big impact on how a child understands the save and spend process.
Help Them Find a Way To Make Money And Explore Small Family Money Decisions With Them
Not every family is able to make room in the budget to give a child an allowance (and we recommend a commission for chores rather than an “allowance” with no effort if you are going that route...) and that’s perfectly fine. If you decide not to give a commission for chores in your home, you can still make money through a comfortable and understandable conversation in your house.
If you choose to buy a particular yogurt or salad dressing instead of the more expensive, similar tasting alternative, it can be a great learning experience for your child. Taking them to the store and showing them the two items while explaining why you’ve opted for the one you’ve chosen can help your child get a real-world sense of that decision-making process. “We chose this yogurt because it’s 75 cents cheaper and it tastes the same. And we can save that money for next time or put it toward another food we need here today.” Might be a quick and easy way to start that conversation.
If you have an older child, you may want to give them the chance to make a small money-related decision. “We have enough money to get $6 worth of ice cream. Should we get ice cream here that we can eat for the next week or spend that money on going to the ice cream shop once this Saturday?” The goal here is to explain the choice, give a few details, and allow the child to ask questions if needed. They may wonder why $6 buys a week’s worth of ice cream at the store but only two cones at the ice cream parlor and this is a great chance to explain that difference.
Show Them The Power of Giving Back
Many children’s finance specialists encourage 3 clear glass jars for teaching children to manage money. The first two are “save” and “spend” of course. And often the third jar is “share”. The reason for this is that children are at a perfect point in life to learn the power and feeling of giving back. When they learn it early in life it tends to stick with them into adulthood.
You can teach your child the awesome feeling of giving back by letting them choose an organization to donate to and having them find change or save up to donate to that organization. You can give some options, tell the child about the different options and how they help. You can even take time to work with or volunteer for the organization if it makes sense with your schedule. Then, you can save up using the three jar approach or make it a family effort by placing the jar (with the name of the organization on it) in a prominent place in the home. Taking time each week or month to count and eventually donate the money is a great family activity. And asking your child to describe how they feel when they make the donation (especially if they can bring the money to someone in person) is a great way to solidify that feeling within them.
Got a Teen? Open A Bank Account To Make Spending and Saving Real To Them
Teaching older children about money is a very big deal and it’s typically all about making it “real” for them. From exploring student loans, interest, compound interest, credit, and debt to opening a bank account and eventually even a credit card, your child will need to understand a good bit about financial topics in order to make the most of any money they earn from an after school or summer job.
One way to help them practice good financial habits is to have them open a bank account. From there you can have them explore how it works, what needs to happen each month, and how to grow the account through things like interest and direct deposits from jobs.
Bonus: Many banks have financial literacy courses for young people and these courses can be helpful for teens and young adults as well!
Want More?
Still looking for more ways to teach your child about money and financial literacy? Check out this resource for more!
You can also grab this workbook from Interest.com, with 14 pages for kids to fill in and color on.
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