Teaching your Children about Money
All parents want their children to grow up to be self-sufficient and successful. Teaching them how to manage their money is an important part of their transition to independence. No matter their age, you can use day-to-day opportunities to educate them about successful money management.
Five and Under
- Open a savings account and make regular deposits.
- Set a savings goal as a family and have your children help you gather and count loose change to save for that goal.
- Use visual aids for saving money, like clear jars or piggy banks, and play games that allow them to count and make transactions.
- Make your children choose. If they express an interest in more than one item or activity, like a toy and ice cream, have them choose one and explain why they can’t have both.
Six to 10
- Consider giving children an allowance. Start shifting small spending decisions to your children, which can be connected with chores around the house or other responsibilities
- Use every day financial transactions as teaching tools. If you swipe your debit card to pay at the grocery store, explain what’s happening behind the scenes between the bank and the store.
- Explain the concept of comparison shopping. Show children how to compare prices for similar items and make smart spending choices.
- Don’t buy items on impulse. If your children want a particular item, encourage them to save their allowance or birthday money to purchase it.
11 to 14
- Start talking about earning income and possible career interests your children might have. Explain to them that the more education they receive, the higher earning potential they’ll have. Encourage them to take the career interest surveys on OKcollegestart to explore potential career paths and discover what might be a good fit for their future.
- Explain the differences between needs and wants when saving or spending money.
- Shift more spending decisions their way. If you plan to spend $200 on back to school items, let them be in charge of getting everything on the list while staying under budget. If they decide to buy $80 jeans instead of a new backpack, don’t jump in and save the day when their old one breaks. Teach them to deal with the consequences of their choices.
- Involve your children in family meetings to talk about household expenses and savings goals. Discuss your family goals and ways to reach them together.
15 to 18
- Encourage your child to get a job to help pay school-related expenses and save for college.
- Consider adding your child to your credit card account, or get him a prepaid credit card. Teach him about properly using credit and understanding all the terms and fees associated with using credit.
- Teach them about investing for the future. Explore online websites and games to show children how to invest wisely, like the Stock Market Game or StockTrak.
- Show children how to create a budget to track their earnings and spending. There are many budgeting apps that teens can use to monitor their money.
