17 Easy Ways to Teach Kids about Money
As if the kids haven’t already been home enough lately, now many parents are stuck with them at home for this new school year.
If your kids are virtual schooling and you’re panicking, wondering “How will I work, run the house, make sure schoolwork is completed, and entertain the kids all day every day?” Take a deep breath.
First, you can do this!
Next, consider ways to use the extra time together to teach them valuable life lessons.
For instance, there has never been a better time to teach your kids about money than while they are stuck at home doing virtual school.
Yes, you have a lot going on.
But, there are easy ways to teach your kids about money after the schoolwork is completed.
Plus, you can have fun doing it on the weekends, such as playing Monopoly or running a lemonade stand.
Not only is it easy and fun to teach your kids about money, but it is also a way to ensure their future success (i.e., moving out of your house and living independently).
Beth Kobliner, a finance author who specializes in money lessons for children, says, “The sooner parents start taking advantage of everyday teachable money moments […] the better off our kids will be. Parents are the number one influence on their children’s financial behaviors, so it’s up to us to raise a generation of mindful consumers, investors, savers, and givers.”¹
Our kids need us to teach them financial literacy because no one else will.
According to a study by the student loan education website Nitro, “Only 16.4 percent of U.S. high school students are required to take a personal finance course” and “84 percent of [millennial survey] respondents agreed that high school didn’t prepare them to handle their money.”²
Teach your kids about money before they leave the house, or they run the risk of making the same financial mistakes you fear (and possibly wind up stuck with you forever).
Read on for 17 easy ways to teach your kids about money.
#1 Stress the Big 3: Saving, Giving, and Spending
Teach your kids the big 3: saving, giving, and spending.
And, ideally, teach the big 3 as soon as you begin to talk about money with them.
In addition to setting savings goals with your kids, look for ways to make this concept more tangible.
For example, use the 3 separate piggy bank system, with each category having its own piggy bank.
Whenever kids get money, they are taught to put a percentage of money in each of the three piggy banks.
#2 Play Pretend
If you have preschoolers, play pretend to teach them about money.
Kids love pretending to shop and pay for their food at little cash registers–and it’s why children’s museums have pretend grocery stores and banks.
You don’t have to take your kid to a children’s museum to play pretend. Purchase a toy cash register with some pretend cash and coins, and let your child shop around your house.
#3 Make It Visual
One issue with teaching kids about money in 2020 is that many parents do not use cash.
As a result, kids rarely get to see cash transactions. That’s why it is a good idea to get clear jars for your kids’ piggy banks.
This way they can see the money add up.
Also, if you take your kids with you to the grocery or pharmacy, shop using cash so they can see that cash does have a limit…and runs out.
#4 Let Them Run an Old-Fashioned Lemonade Stand
Young kids love running old-fashioned lemonade stands because they get to act like adults. It’s also a fun and memorable way to teach financial literacy.
#5 Point Out Costs
A simple way to raise your child’s financial awareness is to point out the cost of merchandise.
For example, teach your child how to compare prices of generic and brand food items in the grocery store. Or, point out that the price of the bigger box of LEGOs costs more than the smaller one.
#6 Discuss Opportunity Costs
Kiddle explains, “Opportunity cost is the value of the next best thing you give up whenever you make a decision.”³
For kids, this is often a difficult concept to comprehend–and why it’s so important to discuss opportunity costs with your kids.
For example, they need to learn that if they blow all their birthday money on something frivolous, they will miss out on a better spending opportunity in the future.
#7 Allow Them to Earn Money
For kids to become financially literate, they need money. But, don’t just give them money. That simply reinforces the idea that money is infinite.
Instead, let them earn an allowance.
According to The Balance, “When kids receive an allowance they must learn very basic budgeting and rationing skills. As they manage their allowance money, their money management skills will improve.”⁴
#8 Get Them a Debit Card
If you want to teach your kids about money but rarely have cash on hand, consider getting them a kid-friendly debit card.
For example, the Greenlight debit card is designed to be used by kids while managed by their parents.
The Greenlight debit card is connected to the parent’s bank account. You can set up allowance funds to be transferred to your kid’s debit card.
The debit card automatically deposits the funds into savings, giving, and spending according to the percentages parents set.
Kids use an app to see how much money they have in their account (and on their debit card), and parents receive notifications for the cost and place of purchases.
There is no minimum age for a Greenlight debit card, and parents with kids as young as 5 have reported success using it.
#9 Play Games
Games are one of the most simple and fun ways to teach your kids about money. If you play games like Monopoly and Life with your kids, you are already making them financially aware.
In addition to the classic board games, there are also computer games and apps, like Practical Money Skill’s Cash Puzzler and Peter Pig’s Money Counter.
#10 Have Them Do Price Comparisons
With all the technology available, it is easy to comparison shop.
Teach your kids how to make price comparisons when you (or they) are shopping so they don’t overspend.
Have older kids do price comparisons when you are planning a family vacation.
It will be eye-opening for them to compare the prices of different hotels and plane flights as they search for the best deal for your family.
Take it a step further and make a game out of price comparison shopping. You don’t need to go into a store–you can do it online.
#11 Review Their Purchases with Them
When it comes to teaching kids how to spend their money, it is a good idea to hold on to receipts.
After a few weeks, pull out the receipts with your child to review their purchases. Ask them if they are still enjoying their purchase or if they regret spending the money.
This is a great way to teach them to differentiate between instant gratification and value when it comes to spending money.
#12 Bring Them into the Conversation
Too often, parents shield their kids from conversations involving money. But kids learn financial literacy from hearing their parents talk about money.
Consider discussing your budget or why you are saving with them.
Let them talk to you about how your family can afford the things they love, such as sports, streaming services, and vacations.
#13 Use Real Numbers
Rather than giving kids vague lectures about spending money, use specific examples and real numbers to drive the point home.
Instead of saying, “You’ll have to save for a long time to afford that car,” break down the payments for them. Show them the true cost of purchasing and owning a vehicle.
#14 Request Cash for Gifts
Consider asking family and friends to give your kids cash for gifts instead of toys. In addition to keeping clutter at bay, this will allow your kids to make their own financial choices.
#15 Teach Teens the Basics Before They Move Out
As mentioned earlier, most teens are not taught financial literacy in high school. Therefore, it is up to parents to teach their teens the basics before they move out.
This means setting them up with a bank account, teaching them how to balance a checkbook, set a budget, and pay their bills on time.
#16 Show Them Online Bill Pay Systems
With so many people using automatic bill pay systems, kids don’t see their parents writing checks for bills and putting them in the mail.
An easy and effective way to show your kids where your money goes is to let them sit with you while you pay your bills online.
Many kids don’t even realize you have to pay for utilities.
Not only will this be an eye-opener, but it will teach them to pay bills like a responsible adult.
#17 Let Them Make Mistakes
Lastly, let your kids make mistakes. And suffer the consequences. If they blow all their money for a month in the first week, don’t give them more.
But do explain that if they were out in the real world, this would be a real problem.
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Sources:
- https://www.forbes.com/sites/laurashin/2013/10/15/the-5-most-important-money-lessons-to-teach-your-kids/#1e1f8c4b6826
- https://www.bankrate.com/personal-finance/parents-teach-kids-about-money-early-age/
- https://kids.kiddle.co/Opportunity_cost
- https://www.thebalance.com/top-ways-to-teach-kids-about-money-2085626
