Teach personal finances to children early and keep going.
When to start teaching personal finance to kids?
We should begin teaching kids lessons about personal finances when they are very young. Never be afraid of presenting a concept before a child is ready if there is no down side.
Children have a remarkable ability to understand complex concepts if they are presented in a way that engages them.
If done well, parents can establish an educational foundation that supports continued financial education training as their children mature.
1. From verbal counting to counting money
Many young children love to sing the ‘ABCs’ and to count out loud. So once you are comfortable that your child won’t place coins in their mouth, introduce them to counting coins. Try counting coins out loud, too.
2. Play store
If your children shop with you regularly, chances are they already have picked up the concept of buying things. Once your child understands money can be counted, set up a pretend store including items to sell and price tags. Teach them how to count their money and purchase items. At first give them money to spend at the store. Then, explain to your child that some jobs earn money. But, we may also choose to do nice things for others to make the world a better place.
3. Create Opportunities to Earn Money
Give your child the opportunity to earn money by giving them a salary or allowance. Some parents tie the allowance to a child’s age. So, as they get older they earn a larger allowance. Another option is to tie household chores to the amount of an allowance. You can pay for certain household chores à la carte or require them for the allowance. The negotiation of allowance payments is an opportunity for learning, too.
4. Create saving boxes
Most children love to color and create. Stop by a craft store and pick up some small boxes, markers, and stickers. Allow your children to create their own saving boxes. Then, discuss adding your child’s allowance to saving boxes. Many small children can grasp concepts before their parent’s believe they can. Brainstorm ideas for saving and label the boxes based on the saving ideas you come up with. Be sure to keep it light and fun.
5. Grow into Virtual Money Tracking and Budgeting
At some point, you and your child will outgrow boxes for financial tracking. As a parent, if you are having trouble keeping up with allowance payments, you may want to consider a computer solution. Some clues that it may be time to upgrade your financing tracking include:
- your children’s saving boxes are overflowing
- your child is no longer proud of their saving boxes
- your child needs something new to keep their interest
- your child is interested in learning more about computers
6. Introduce your Child to Budgeting Software
One fun way to introduce money tracking and budgeting is through the web application, Revenue Rabbit. The free version stores all your data locally with an option to add it to a spreadsheet for safe keeping. Learning Revenue Rabbit with your child also has the added bonus of introducing computer literacy while promoting financial literacy.
7. Ideas for Older Children
Sooner then you think, your young children be on their way to financial independence. Continue to adjust your approach as they grow. Before long, you will want support even more independence with concepts such as:
- Introduce your child to Greenlight, a Debit Card For Kids
- Discuss saving for larger items such as cars including reoccuring expenses such as gas and insurance
- Research the cost of going to college and come up with a plan
- Research common jobs and salaries for age appropriate positions
- Create and submit job resumes
- Practice interviewing
Let’s get in touch
Please feel free to contact me to chat about more ideas on financial literacy learning for children. As a parent of two young adults, I have always been passionate about the role of play as teaching.
On twitter, use @ardith_falkner or you can send direct feedback through my web application, Revenue Rabbit.