Instilling good financial habits in children from a young age can pay off tremendously down the road.
Though kids aren’t earning incomes, it’s never too early to teach money management skills that will serve them for life.
Here are some tips for parents on how to raise money-smart kids.
Start With Allowances
Giving children a weekly allowance is a great way to introduce basic money skills. Let them earn small amounts for completing chores and demonstrate how to budget, save, and spend wisely.
Help them divide funds into saving, spending, and giving categories. Praise goal setting and delayed gratification when they forego impulse purchases. Allow natural consequences when funds run out too quickly.
Open Savings Accounts
Take your child to the bank to open a real savings account. Watch balances grow via compound interest. Set savings goals for future purchases. Show how small deposits add up over time.
Let the child take pride in monitoring statements and being responsible with withdrawals. A sense of ownership over one's finances is a powerful motivator.
Involve Kids in Budgeting
When grocery shopping or paying bills, explain how you stick to a budget. Show kids how coupon clipping and price comparisons help save money.
Discuss ways your family cuts costs and prioritizes what's most important.
Let children help make economical meal plans. Visuals like jars to collect change for goals make money more concrete.
Make It Relevant
Tie lessons to things relevant in a child's world. Play store with play money to reinforce counting skills. Reward chores with tokens to “buy” privileges or treats. Discuss the cost of toys and entertainment they enjoy.
Explain how you earn money at your job to pay for expenses. Money becomes more meaningful when children see its real impact.
Instilling financial literacy at a young age pays dividends over time. With parental guidance, even small children can grasp basic money skills that set the stage for future smart decisions and financial independence. The hands-on learning sticks with them.
