Entrepreneurial Kids: Teaching Kids About Money – 7 Ways to Teach Kids About Money

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Money certainly doesn’t buy happiness, but it does buy choices! Understanding money and how it can work for you or against you is critical in navigating the world.

As parents, we can start to educate, motivate and empower our children to invest, share, save, and spend wisely from an early age! Every single day there are opportunities to teach your kids about money. Using these small daily lessons, we can teach them to set goals with money and how to use their gifts to create more money!

7 Ways to Teach your Kids about Money

#1: Counting Money – Can your child count? As soon as children start learning to count, use money to help them practice. It will help them be familiar with the different types of money. Start by letting them count the coins as objects and then later you can have them count by value. For example, using nickels to count by 5’s or dimes to count by 10’s. Observation and repetition are really important so be sure to have them practice counting often.

#2: Share your Money Values – What are your values around money? Parents have an amazing opportunity to pass on values to their children as well as to assist them in creating their own values. Children will often adopt the values we have just by watching how we save, spend, and share with others. We can increase their understanding by telling them when we are giving to charity or purchasing new stocks and so on. Talk about your values with them and ask them what things they think are important. Their answers might surprise you!

#3: Differentiate between Needs and Wants – Is that a need or a want? Explain to your children that “needs” keep us alive and safe – food, shelter, clothes, etc. The things we “want” are everything extra. Explain how when we mix up our needs and wants, we end up overspending.

#4: Ready, Set, Goal! – Regardless of the age, people don’t reach goals unless they set them. Teach your children to set goals based on things that they want so there is motivation for them. As they reach their goals they will gain confidence to set bigger and bigger money goals. Soon goal setting and achieving will be a habit for them.

#5: Saving and Earning Interest – Encourage kids to save their money by teaching them about earning interest. Consider paying them interest in the money they save at home as it’s hard to appreciate the power of compound interest in a market where interest rates are low. Get your kids to help calculate the interest so they can see how fast money accumulates through the power of compound interest.

#6: Make Saving Money Easy – If you give your child an allowance, give them the money in denominations that allow for them to easily save. If the amount is $5, give them 5 one dollar bills and encourage them to set at least one dollar aside for their savings.

#7: Take it to the bank! – As soon as children learn to read and write, take them to the bank and open up a custodial account. Encourage them to make frequent deposits so they can watch their bank balance grow. When they are older, they can get student checking accounts to learn how to manage spending.

Always be looking for ways to teach your children about money. Managing their money is an essential life skill, one that rarely gets taught in school. Seizing every opportunity to educate and engage them with money is the key to raising an entrepreneurial child!

Want to raise a CEO Kid? Head on over to RaisingCEOKids.com to grab your copies of “40 FREE and Low Cost Tools to Help you Grow Biz” and “The Power of One” Webinar. For daily updates, LIKE RaisingCEOKids on Facebook!

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About Author

Sarah Cook, Founder of Raising CEO Kids, is a sought after speaker, business coach, sales trainer, and co-author of “The Parent’s Guide to Raising CEO Kids” (August 2011). She was the host of the CEO Kids Success Summit (2009) and the Cash Savvy Kids Summit (2010). Sarah has been featured in blogs and on radio around the world as well as in Yahoo Finance and Reuters. Sarah has interviewed over 160 young entrepreneurs and most of their parents, uncovering the pillars and pitfalls of being a successful teen CEO. In her soon-to-be released book, Sarah discusses ways that teens can turn their talents and motivation into money. She helps teens and tweens around the world get the support, tools and strategies they need to live their dreams. When not working to grow businesses, Sarah can be found spending time with her husband and three entrepreneur kids, working out, reading, connecting with people on social media, or indulging in extra dark chocolate with chili peppers! You can find Sarah on Twitter @SarahLCook or Facebook.com/RaisingCEOKidsFans

20 Comments

  1. Sarah,
    These are great tips and so often overlooked.
    Our 6 year old son has just started to learn more about money as he started his first buisness before Christmas making and selling bird boxes (he loves birds!!). It has given us the opportunity to talk to him about money from a business, personal and philanthropy perspective. Following all his Christmas sales he chose to do teh following with the money he had – open a bank account and save save some, spent some on something he really wanted and used some to buy some stuff for his classroom at school.
    As you point out, it is the practical doing that helps to reinforce the values and conversations.

  2. I particularly like the concept of teaching them about goals. I think that is one my kids struggle with the most. Great points. Thanks!

  3. I think sharing the value of money with a child definitely helps their willingness to start counting money. I especially enjoy the idea of allowance and setting aside money to purchase a toy or treat the child wants. In addition they will have to think about whether they really want the item and hopefully will allow them to enjoy it more as well.

  4. Love #3 I totally agree, we’re always seeing commercials on tv and Miss A thinks she needs everything she sees, but we explain over and over again that we don’t NEED everything we see. It’s good stewardship too!

  5. Sarah: This is a great post. We have #ptchats every Wednesday at 9 p.m. EST. I will discuss this as a topic–how to teach kids to be financially responsible. We would love to have you as a panelist.

  6. Those are seven good ones Sarah! I’d like to add “Make a budget and stick to it” since learning to budget and track spending are such important basic personal finance skills – key to living within (or preferably below) your means.

  7. @FamZoo I totally agree! Learning to budget is such an important piece of being $$ smart! We have weekly discussions abt personal & family budgets @ our house!

  8. So true! Commercials make “needs” & “wants” really confusing for kids which is why it is so important that we teach kids abt marketing and the difference between needs and wants!

  9. That is right Nick! When they have to save for an item, the excitement of having that item sometimes wears off and they may decide they no longer want the item. It is a great way to reduce compulsive spending!

  10. @MollyinMinn So true about kids and setting goals! What I have found is that when you find the “heart’s desire” in kids they have a much easier time setting goals! My children had a hard time at first, but when they find things they REALLY want that I am not willing to buy for them they are truly motivated. We provide the “needs” in our house and some of the “wants” and then we give them lots of opportunities to set goals to earn the rest of their “wants”.

  11. @Ali_Davies I love that your son started his own biz over Christmas! That is so awesome and very cool that he donated some of his funds to his school class! What a great example he is in giving back to others! You are doing a great job parenting!

  12. The timing of this post is good….I’m trying to teach my son that he can’t just get whatever he wants when he wants it…so I officially started a Google document today to keep track of what I buy for him (wants) and he’ll have to work it off. If you (or anyone) has any good suggestions on software/tools to use to get kids involved in that type of “banking” I’d love to hear them.

  13. Thank you for the nice referral Sarah. Michelle, just hit our Contact link at the top of our site if you have any questions. We’re always happy to help! -Bill

  14. These are great tips!  We’re just really getting into the home budgeting thing with our older daughter using the envelope system that @DaveRamsey recommends.  Instead of “allowances,” he recommends “commissions” for chores.  We’re starting this on Sunday.  She’ll get $1/chore/week (5 chores each week), and she’ll have 3 envelopes – “give,” “save” and “spend.”  This will teach her biblical stewardship (tithing) and encourage her to save for the things she wants to buy.  Depositing money into her savings account is a big deal to her, too, and she’s looking forward to watching that grow, too.

  15. Great post! Love the idea of teaching them the concept of compound interest. No reason to wait until they open a bank account for that – already thinking about how I can pitch compound interest as their ‘reward’ for saving money.

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