According to the University of Cambridge, children as young as seven can understand the basic concepts of money management.A
As a parent, one of your responsibilities is to prepare your child for an independent life. There are many lessons for a child to learn before they leave your care and sometimes lessons about personal finance are overlooked.
Thankfully, there are small, simple ways that you can teach your child money management skills that will ready them for adulthood. Here are 10 little ways to teach kids, from elementary to high school age, about money management.
Money Management for Elementary School Aged Kids
Start with a piggy bank
A piggy bank is a fun way to introduce money management to kids. A transparent piggy bank is ideal so the kids can physically see their money grow. You can also use a transparent jar instead. These are both good ways to keep money safe in one place. Encourage your child to save their change and dollars when they receive them. As the money grows, be sure to congratulate them for saving.
Teach them to wait
When you are at the store and your child eyes a new toy or outfit that they want, have them wait at least 24 hours before making the purchase Encourage them to think about their choice and decide if it’s really something that they want to spend their money on. Your child will learn about patience and the power of combatting impulse spending.
Model the behavior you want from them
It’s going to be harder to teach your child to practice good money habits if you aren’t following them. Our kids are watching us and learning from our behaviors. Reinforce good spending habits by avoiding making impulse buys and walking them through money matters, including buying groceries or visiting ATMs. Your child will feel like they’re being let in on a grown-up secret, and you’ll know you’re imparting important life skills in turn.
Show them how much things cost
Telling kids “that toy costs $10, which is expensive” may not be enough. Rather than telling your children, show them by bringing their piggy banks to the store. If they want to buy something, show them how much of their money it will take to make the purchase.
Start them on an allowance that’s earned
A regular allowance is a good opportunity to teach kids some money management skills that they will use throughout life. Determine an amount they may earn on a regular basis, ideally weekly. The key is that they must earn the money. Decide what chores they may do around the house to earn the money. Some ideas may include cleaning their room, putting away laundry, taking out the garbage, etc. When they see that hard work pays off, that habit is more likely to stick with them in adulthood.
Money Management for High School Aged Kids
Open a bank account
A savings account or student checking account will give them a place to store their money. If they start working a part-time job or have a babysitting gig, having a bank account will help them track their income. Many accounts have a mobile app that makes it easy to see how much money they have. You may also be able to view their account and set parental controls.
Many banks also offer a feature where you can create a savings goal that can be tracked or have a certain amount of a paycheck automatically transferred into a savings account. Have your teen download the app and show them how to see their transactions, deposit a check, etc. Also encourage them to set a savings goal.
Encourage them to give
Teaching your teens to donate will also provide them with both a financial lesson and a lesson in social responsibility. It’s not about the dollar amount that they give as much as it is about being appreciative of what they have. Let them choose a charitable organization that interests them. Talk to them about why they think that their chosen cause is important.
You can use a Flare Account Charity Debit Card1 to support the charity associated with the card4. Choose debit cards that donate to National Breast Cancer Foundation5, Homes for Our Troops6, Save the Children7, and The Humane Society of the United States.8
Create a budget with them
This is especially useful if your teen is working. As mentioned before, some mobile banking apps have a budgeting feature which can be used for this. Otherwise, there are plenty of apps available for free that include budgeting features. You can also have your teen create and keep track of a budget the old-fashioned way – using pen and paper.
Show them your household finances
Even as they grow closer to adulthood, few teens know much about flow of funds within their households. Show them how much you are bringing in each month from your paychecks. Then subtract your monthly bills (cell phone, internet, rent/mortgage, etc.) and weekly/daily costs (gas, groceries, tolls, etc.) and then show them what is left over. Show them what you plan to spend this residual income on and what you plan to save. This is a helpful hands-on experience that puts money management into real-world practice.
Help them set savings goals
Talk to them about how saving is an important tool in managing money. Your teen should set a goal to have a percentage of their income go towards savings. Start them off with a small, attainable goal like saving $50. Once they reach that goal, encourage them to go up one more level, then another. Explain why it is important to try to have a “rainy day” fund and how the money that they save now can help them overcome unexpected financial issues later.
Are you also wondering if it’s time to start saving money for your child’s education? Read our blog post “When (and How) to Save for College for Your Child” to learn more.