Financial Lessons for Kids
As a parent, it is our responsibility to teach our kids about finances and the earlier we do it, the better. Even if our kids learn about money in school, it is still important to practice and teach these valuable lessons at home. Here are some financial lessons tailored for kids ages 5-12.
- Understanding money basics. Teach them what money is and the importance of it. Using coins and bills to explain different denominations is helpful to get started. As they get older, they can learn different forms of payment, such as debit and credit cards.
- Introduce the concept of earning money. Give your child(ren) chores as a way to earn an allowance. Other options to earn additional money (depending on age) could include selling crafts, dog walking, mowing the lawn and babysitting.
- Saving vs. Spending. Encourage saving by providing them with a piggy bank. Explain the difference between needs and wants.
- Set goals. Teach them how to set a savings goal. A good example is to save for a bigger item, like a bike or a video console. Celebrate when they reach their goal.
- Make smart spending choices. Allow them to make their own decisions but discuss the outcomes. This will teach them the value of money and give them a better understanding of how much items cost.
- Introduction to budgeting. Graphs are a good way to demonstrate how to budget. They can put their allowance into different categories like saving, spending and sharing or donating.
In general, it is important to lead by example. Kids learn a lot from watching their parents so it is important to practice good financial habits yourself. If you can, make it fun. There are many different games and apps designed to teach financial concepts which we’ve highlighted here. We also encourage you to openly discuss money with your children. We hope the lessons above will help guide your kids toward a solid foundation for a healthy financial future.
