Three Ways to Teach Kids Money Skills

Kids should learn about money from a young age. When they become adults, if they have not learned about money management, the value of money, and the pitfalls of money, they will not likely be very good with their own. So, how can you teach kids about money in order to set them up for success in their life? Consider the following:

1. Get your kids involved. The best way to learn about money is to be part of the family finances. Your children should be involved in your budget setting, and bill paying. Let them see how much your paycheck is, and how you allocate it to cover expenses like your home, your vehicles, insurance, and of course food and fun. If they see money management being practiced on a regular basis, it will become a part of who they are. So, include them. Let them see how you save and spend. Teach as you do. Each time you get a check, and put money in savings, indicate to your child that you pay yourself first in order to prepare for a rainy day, etc. Every bill and every paycheck are a teaching opportunity. So, take advantage of them.

2. Let them practice. Once your child has observed you managing the money for the family, it is time to give them a chance to show what they have learned. Give them a weekly allowance, and be clear on what they must cover with it. For example, you may give them money that needs to be allocated to their school lunch program. But, don’t force it, let them decide where and how the money will be spent. A few days going without lunch because they decided to buy a new x-box game instead will teach them quickly how to make priorities with money, and how to budget, save, and spend in an appropriate manner. An allowance (assuming it is not excessive), is the perfect way to give your child some wings, and let them learn how to fly before they are responsible for their needs as well as their wants. It is better if a child learns not to blow their whole check (or allowance) in one spending, when it doesn’t affect the roof over their heads, then to never give them the chance, and have it happen in the real world where it means ruined credit, eviction or foreclosure, etc.

3. Play with money. This does not mean give them real money to play with, but set up their play so that it includes money. A family game of monopoly, for example will familiarize your child with making purchases on a larger level. A fun market set that comes with a stack of goods, and paper money, a shopping cart, etc. will help small children learn about grocery shopping and money. It might amaze them that you don’t just load up your cart with whatever you want, and walk out of the store. The more they play with fake money, the more familiarized they become with the concept and value of money.