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!
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