November 1, 2023 — By Wendy Sachs
It’s never too early to start teaching kids about money. Studies have shown that core behaviors about essential money habits are formed by the age of seven years old. It takes a combination of teaching kids good habits and having good routines at home to give your kids a healthy set of skills on money management.
Here are a few ideas of fun ways to teach kids these essential skills.
Talk About Money
Talk about the three basics: money you spend, money you save and money you give to charity. There are many products on the market that let even little kids store their money in these three categories. One such bank is the Moonjar. So simple a set up that you can use it even with toddlers, it is colorful and educational and fun.
Connect the concept of value with money. When you go shopping make a game of checking prices and guessing why something is worth more than another similar item. Compare giveaway items to a more expensive purchased item- such as a small plastic toy from a restaurant vs. a wooden object that is purchased.
Practice with Money
As kids get older let them practice making mistakes. Empower your kids to spend money! It’s hard when they spend on some toy you know won’t last. But they will learn from the experience why it might be better to save and buy a higher quality. The lesson will last longer than your careful explanations ever will. Starting them with an allowance and letting them have decision making power with those funds is the top advice from almost all money educators.
Connect charitable giving to things that interest them. If you kid is an animal lover, investigate ways that money can be donated to a zoo or a animal welfare league. If they are artists, check out gifts to museums or art programs for kids. Make giving fun! Most charities will give you info on what the money goes for and the expenses that keep the organization going.
Need v Want
From an early age watch the vocabulary of a NEED and something you WANT. Identify this when you grocery shop, when you spend money and all year long. Use these words with intention consistently with items around your house. We need food but we want these candy bars. We need shoes but these fancy boots are something I want.
As children get older you can start to teach them about the power of saving and investing. Set up a system where they can earn interest on their savings. You can even invest in kid friendly companies like Disney or Mattel and watch money grow (hopefully) over time. While a 7 year old may not grasp all the intricacies of the market, they will understand some of the basics.
Spending some time in helping your children develop good money habits and a basic understanding of will pay off in a big way with your kids. These lessons can start early and will be much appreciated as they grow.