If you don’t teach your kids how to manage money, somebody else will. And that’s not a risk you want to take! We’ll show you how to give your kids the head start you wish you had and set them up to win with money at any age.
How to Teach Pre-Schoolers and Kindergartners About Money
1. Use a clear jar to save.
The piggy bank is a great idea, but it doesn’t give kids a visual. When you use a clear jar, they see the money growing. Yesterday, they had a dollar bill and five dimes. Today, they have a dollar bill, five dimes, and a quarter! Talk through this with them and make a big deal about it growing!
2. Set an example.
A study by the University of Cambridge found that money habits in children are formed by the time they’re 7 years old.(1) Little eyes are watching you. If you’re slapping down plastic every time you go out to dinner or the grocery store, they’ll eventually notice. Or if you and your spouse are arguing about money, they’ll notice that too. Set a healthy example for them and they’ll be much more likely to follow it when they get older.
3. Show them that stuff costs money.
You’ve got to do more than just say, “That pack of toy cars costs $5, son.” Help them grab a few dollars out of their jar, take it with them to the store, and physically hand the money to the cashier. This simple action will have more impact than a five-minute lecture.
How to Teach Elementary Students and Middle Schoolers About Money
4. Show opportunity cost.
That’s just another way of saying, “If you buy this video game, then you won’t have the money to buy that pair of shoes.” At this age, your kids should be able to weigh decisions and understand the possible outcomes.
5. Give commissions, not allowances.
Don’t just give your kids money for breathing. Pay them commissions based on chores they do around the house like taking out the trash, cleaning their room, or mowing the grass. This concept helps your kids understand that money is earned—it’s not just given to them.
6. Avoid impulse buys.
“Mom, I just found this cute dress. It’s perfect and I love it! Can we buy it please?” Does this sound familiar? This age group really knows how to capitalize on the impulse buy—especially when it uses someone else’s money.
Instead of giving in, let your child know they can use their hard-earned commission to pay for it. But encourage your child to wait at least a day before they purchase anything over $15. It will likely still be there tomorrow, and they’ll be able to make that money decision with a level head the next day.
7. Stress the importance of giving.
Once they start making a little money, be sure you teach them about giving. They can pick a church, charity or even someone they know who needs a little help. Eventually, they’ll see how giving doesn’t just affect the people they give to, but the giver as well.
How to Teach Teenagers About Money
8. Teach them contentment.
Your teen probably spends a good chunk of their time staring at a screen as they scroll through social media. And every second they’re online, they’re seeing the highlight reel of their friends, family and even total strangers! It’s the quickest way to bring on the comparison trap. You may hear things like:
“Dad, Mark’s parents bought him a brand-new car! How come I have to drive this 1993 Subaru?”
“Mom, this girl at school got to spend $10,000 on her Sweet 16 party. I want to do that too!”
Contentment starts in the heart. Let your teen know that their Subaru (although not the newest car on the block) is still running well enough to get them from point A to point B. And you can still throw a memorable, milestone birthday party without spending a chunk of your retirement savings funding it!
9. Give them the responsibility of a bank account.
By the time your kid’s a teenager, you should be able to set them up with a simple bank account if you’ve been doing some of the above along the way. This takes money management to the next level, and will (hopefully) prepare them for managing a much heftier account when they get older.
10. Get them saving for college.
There’s no time like the present to have your teen start saving for college. Do they plan on working a summer job? Perfect! Take a portion of that (or more) and toss it in a college savings account. Your teen will feel like they have skin in the game as they contribute toward their education.
Teaching your children about money at any stage is going to take time on your part. It won’t always be easy. But if you want your children to know how to successfully manage their money when they get older, taking the time now will be worth it.