Teaching Kids the ABC’s of Money
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By Bromwich+Smith Staff | 941 words | Reading Time: 4 minutes, 42 seconds| Last Update: 2022/06/06
As parents, we teach our kids how to walk, how to talk and how to make friends. We help them with skinned knees, driving them to after school activities and birthday parties. What parents often forget to teach kids about it the ABC’s and 1-2-3’s of financial responsibility. Here are some simple tips to give your children the information they need to for money success at any age- who knows mom and dad might learn something too!
Tips for Preschoolers and Kindergartners
1. Use a clear jar to save.
Many kids will start their savings with a piggy bank, and while it is a great idea, it doesn’t give children a visual. When you use a transparent jar, kids can see their money growing with each addition. This can be an exciting way for kids to learn that saving money has benefits.
2. Lead by example.
Kids often follow “monkey see, monkey do”. Take your kids with you to the bank or have them sit with you while you pay bills online. By showing your children healthy money habits now will set them up to follow your lead when they get older.
3. Show them that “things” cost money.
Help them spend their hard-earned money by taking a few dollars out of their clear jar to take with them to the store. Let them decide on an item to buy with their money and talk about what they had to do to earn that money. By knowing that the one item was worth 2 weeks of keeping their bedroom clean will put a value to the work they did, and the money earned. Once they have decided to purchase an item let them physically hand the money to the cashier to understand they do not get to keep their money and the item.
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Tips For Elementary Aged Children
1. Show opportunity cost.
That’s just another way of saying, “If you buy this video game today, then you won’t have the money to go to a movie with your friends tomorrow.” At this age, our children should understand that we work to earn money, and that there are not unlimited funds.
2. Give allowances based on merit.
A weekly allowance should never be expected, but rather earned. Consider paying a set amount for each task, not a lump sum for a time period. I.e. $1 for taking out the trash, $2 for cleaning their room, $5 for mowing the grass etc. By putting a price to the task, it helps place a value on the item.
3. Avoid impulse purchases.
Kids this age will often see something and want it in that moment. Instead of giving in to impulse buying, set boundaries. Let them know that this item isn’t in your budget for that day and if they want it, they will need to purchase it with their money. Often knowing they will not receive the item for free will discourage the purchase. Suggest thinking about the item and coming back later to purchase. Don’t be afraid to put your foot down, not every trip needs to result in a reward or purchased toy.
4. Giving back.
Once they start to have a little money and understand the value, encourage them to give back to their community by finding a charity that they want to support. Many kids will choose animal shelters, or food banks. Suggest donating a percent of their money or suggest asking for money donations for their birthday instead of gifts, which can go towards their chosen cause. Another way to raise money would be to sell unwanted items like old toys or clothes- which as a bonus helps mom and dad declutter the house!
Tips for Teenagers
1. Give them the responsibility of a bank account.
This takes money management to the next level and will (hopefully) prepare them for managing a much heftier account when they get older. Some banking institutions offer programs where mom and dad can directly deposit allowance or earned money to their account, so teens are spending their own earned money.
2. Set up college savings.
You may have already set up an education savings plan, if not don’t worry there’s no time like the present to start. Does your teen plan on working a summer job? Perfect! Talk to your teen about placing a portion in a college savings account. This will help them feel like they are contributing toward their education and give them ownership of their education.
3. Teach them the danger of credit cards.
As soon as your child turns 18, they will be overwhelmed with credit card offers—especially once they’re in college. Have the talk early on about why debt is a bad idea, but how to start building their own credit in responsible ways.
4. Get them on a simple budget.
Since your teen is probably attached to their cell phone anyway, get them started on a simple budgeting app. Now is the time to help your teen budget—no matter how small.
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Start while they are still living at home. Start by showing them your budgets, where your money comes from, how much goes towards taxes, housing costs, and how you allocate the remaining funds each month.
Remember Bromwich+Smith is here to help, and we know learning about money at any age takes time. An early start to learn about managing money, sets them up for true success.
f you are interested to learn more check out this CTV segment about Money and Teaching our kids visit: https://www.youtube.com/watch?v=wARgkmWO5pI
If helping your child learn about money is overwhelming, or if you are facing financial difficulty know that you are not alone, we're here to help. Call us today to receive an initial free, no obligation, confidential consultation by phone 1-855-884-9243. You can also request a call. Let’s see you flourish!