Learning how to use money responsibly teaches kids to be responsible in all aspects of life. If they know and understand the value of money, they’ll become responsible adults. If you teach your kids about money early, you develop their confidence and they learn to analyze situations, particularly those that deal with money. Early financial literacy helps kids learn the importance of saving, investing, sharing, and mindful spending.
Financial Literacy at Home
Parents are the best teachers when it comes to how to teach your kids about money. You interact with your kids every day, so they witness what you do day in and day out. Whatever your actions are, they try to emulate them. You are their role models. So, the home is the ideal classroom for teaching kids and teens money management.
Make Financial Literacy Interesting
Money is interesting and exciting and it’s an important life skills kids and teens need to learn. However, when it comes to talking about how to save money, getting their attention can be a bit difficult. Kids’ often have a short attention span and teens are often somewhat hostile to their parents suggestions. As a parent, your first goal is to make financial literacy as interesting as possible. There are several ways to do this:
- Reward kids for tasks or chores completed.
- Allow kids to make some purchasing decisions and have a bit of control over their money.
- Telling stories that involve money and savings.
- Allowing kids to use a debit card for kids (with adult supervision).
I always say, the best way to teach your kids about money is to give them some. They need that hands-on experience, especially teens. There are so many things they want, things that their friends might already have, so giving them a chance to earn money for those items, save it up, and then spend it wisely is better than all the talking in the world!
How Kids Should Use Their Money
Every kid is going to be different. Some kids want to spend their money as fast as they can get it while others will hoard money or are just indifferent to it. They need to learn a bit of self-control with natural limits on what they can buy. Having a limited budget requires them to plan ahead and choose between different items they want and that’s a great lesson to learn. Many adults have never learned this important lesson.
You’ve probably heard someone talk about investments, but you do not really know what it is. And, of course, you know what it means to share and save, but only the basics of these. Your parents can help you understand how money is spent using different creative techniques. Team up with your parents to make learning money management fun.
Here is a simple but detailed infographic that can help you understand the proper use of money. These five easy steps are a good way to jumpstart your financial literacy journey.
The traditional way most parents teach money is to set goals for saving, giving, and spending. BusyKid adds a 4th option for investing. They offer a kid-friendly investment program, where kids can learn the basics of investing.
Saving – This is one of the most important financial lessons for both kids and teens. Americans typically save less than 10% of their income and a whopping 35% have no savings of any kind. That’s kind of terrifying in the real world.
Giving – Young kids are quite selfish by nature and so are teens, so teaching empathy at an early age is very important. Teaching kids to give unused toys, outgrown clothing, and make regular financial contributions to food banks or other charities is helpful. It’s important for them to see the connection between the money and the benefits is helpful for them to enjoy the process of helping others.
Spending – This is the part most kids are going to be the most excited about. Kids can enjoy the process of picking and choosing items and making decisions about what they want to buy. For the overspending kids, it’s probably an important lesson for them to learn if they are broke until the next pay cycle, so let them spend freely. For the hoarder kids, help them to enjoy picking out enjoyable items to spend their money on.
Investing – Investing can be complicated, but it is an important skill for kids. Especially for teens, it’s important to learn about the investment system and how it can benefit them as adults. Crypto and bitcoin are going to be a big part of their adult future so teaching them about these concepts early on can be helpful.
Either way, it’s super important to teach your kids about money and how to use it effectively. All too soon, they will be adults and you want them to start off with healthy money behaviors.
About the Author:
Samantha Green is the Content Marketing Strategist for the MCA award-winning app, BusyKid, the first and only chore and allowance platform where kids can earn, save, share, spend, and invest their allowance. A mom of two, she enjoys spending time with her kids and reading books to them