As a parent, it is your responsibility to work out how to teach children about money and to enforce it. Let’s look at some ways in which to do it.
As parents, it is your responsibility to raise responsible humans and to make sure that your children get the best education possible. How to teach children about money is an important part of the education of your children, because if they don’t know how to handle money, they could find themselves in a lot of hot water in the future.
Many schools don’t even teach money handling to the youth, so if you don’t do it, who will?
It is never too early to start teaching your children about money. Judging by the amount of credit card debt worldwide, it is a scary thought that most adults don’t know too much more about managing their financial affairs than their children do.
Believe it or not, children as young as three years old can already grasp the concept of saving and spending. By the age of seven years old, a child’s money and spending habits are formed (scary thought).
As parents, you need to take advantage of everyday money teaching moments.
Here are some examples of what to teach children about money.
How To Teach Children About Money
Firstly, every child, from quite a young age, should get an allowance. This shouldn’t be so much that the child can indulge in his or her every wish, but should be adequate to allow them to start to work with money by:
- Putting some aside to save
- Putting some aside to spend
- Putting some aside for charity
Having three separately labeled jars can help your child to allocate his or her money as they get it, and not end up putting into saving or charity only what they have leftover at the end of the month.
Try and encourage them to allocate 10 percent to charity, and another 10 percent, if not more, into their savings account.
Open a savings account for your child and take him to the bank with you when you put the money into it.
Help your children to understand the difference between needs, wants and wishes. This will prepare them and help them to spend their money more wisely in the future.
Develop Entrepreneurial Skills
Next, you need to encourage your child’s entrepreneurial skills. Let him or her think up ideas of how they can make some extra money. Don’t simply create jobs for them so they can earn. Let them come up with the idea, and hire your child if it is something of use to you.
An allowance should not be swapped for regular chores, but each child should have age-appropriate chores that they need to do as members of the family, without saying.
Let your child try his hand at starting his own business. Let him start a website about his favorite topic. If you need training on this you can look at Wealthy Affiliate to get started.
When Out Shopping…
Whenever you go shopping with your child, use the experience as a learning one. If you pay with a credit card, explain to your child that the money will need to be paid back by you in full by the end of the month in order to avoid interest.
Even better, teach your children that it is best to have credit on their credit, which earns them interest and doesn’t put them in debt when they spend.
With young children, it is far easier to explain actual cash being spent, than plastic.
If your child wants something expensive, teach them the value of saving for the item by putting money aside for it each month.
Don’t lend your child the money to buy it, or he or she will get too used to instant gratification, which is a huge problem worldwide. It is much more rewarding to save for something and then to buy it cash and not have to owe anything on the purchase.
My father always said that you should only ever borrow money to buy a house and only if you really have to, a car.
Learn To Save In Other Ways
Show your child ways in which you can economize at home and save money. Simple things like saving water, using leftovers wisely, or buying in bulk when there are specials all help to educate him or her.
Have regular family discussions about money and how to save it. Think of practical ways on how to teach your children about money at appropriate opportunities.
As parents, you need to set an example for your children. Children always copy what they see at home, and if they see you spending excessively, this is exactly what they will do and end up doing in the future.
If you have any other tips on how to teach children about money, please leave your comment below.
Hello Michel,
Great article on How to teach Children about Money.
It is very important the children to know that they have allowances and to allocate them adequately. Easy to say, hard to do 🙂
I recently read a great book “Poor dad, rich dad” by Robert Kiyosaki – has some great advises how to teach your child to appreciate money.
Ilina
Hi Michael, thank you for the information. Although I don’t have any child, I have siblings and friends that already have kids. Even one of my friends has a daughter who recently turned 5 years old.
I agree with you that we should teach about importance of money when they are small. This way, hopefully they can grow with awareness of money.
Looking forward to your other post 🙂
I love the part in your article about teaching your child to develop their entrepreneurial skills. The education system is teaching children to be employees and not business owners. It does start at home like all the other things we teach our children before they have to go out into the world. I think they should be taught investing also at a young age.
This is a great article! Will definitely keep this in mind when its time to teach my daughter about money. I remember back then, I used to save up my allowance if I wanted something coz I knew I couldn’t ask for more. There was also one occasion where I was given a bank book by my grandmother. That taught me to save for the future (even if I didn’t really understand what future meant then). I like your idea about save, spend, and charity jars. 🙂
The book idea is also great. Thank you Raquel.
Nice website, and I can see you’ve been around for awhile. Congratulations! You have a lot of good information for the affiliate marketer and a lot of other information as well. How is all this working out? My comment on this is that it seemed to bring too many ideas and unrelated topics into view at the same time. I was also distracted by the ads and the column on the right you labeled “Sponsors”.
I found a lot of good Internet marketing information, which I take it is your focus. Wealthy Affiliate came up a number of times. Is WA where you make most of your money online? Or does everything else provide more? Just curious, because I got lost along the way of looking at different posts and recommendations you made. And at one point I found I couldn’t get back to the original page where I had started.
You’ve got a lot of good information here. My basic comment would be to organize it in a more meaningful manner.
Hope this helps. Ted
Thanks Ted,
This site has evolved over a number of years. My primary focus is on Website Creation and Wealthy Affiliate, but the other recommendations I make are sites I have been a member of for years and that are still working for me – mostly in the way of advertising.
Hopefully as I work more on the site, it will become less confusing.
I think most children pick up a lot of their ‘money behaviors’ from their parents. For example, my parents are quite thrifty and I learn from a very young age that money doesn’t come easily and that you must always save for rainy days.
These days, I see a lot of kids get what they want and although I like to see them happy, I hope they can learn the value of saving and earning money which will help them create a better future.
You are so right Cathy, and it is our responsibility to teach our kids to save from a early age. Instant gratification is all to rife these days.
This post is very much needed as many kids become adults not understanding the value of money and how to budget properly. It isn’t taught in schools so it must be taught at home. When my kids wanted something, I used to ask them how they planned on saving up for it. They would look for small jobs or chores they could do to earn some cash. These are skills kids need to success.
Great idea Wendy. This teaches kids that they need to work for what they want in life and it won’t just get handed out to them on a silver platter.
Great article, on a very important subject.
I was taught about money by my parents opening up a simple Post Office account for me (this was back in the 80’s). It wasn’t exactly that easy to withdraw from these types of older accounts, so I had to be 100% sure I needed the money before I went for it!
Once that money from the initial deposit was gone, my parents made it clear that no more would be going in.
Unfortunately I failed miserably at this and learned the hard way…my sister was a lot more shrewd…and even still has her account!
Well, at least your parents tried Chris. But I am sure you have learned a lot from financial mistakes since then and become more aware of saving and not living on credit.
Your blog is very timely. I’ve been meaning to sit with my kids to discuss this matter in depth now that they are in pre teens. I have no problem with them overspending or dealing with debts. They were actually the ones who are asked by their friends and classmates if they could lend some money for sudden project expenses. I want to tell them what to expect if they lend someone some money and what to deal with those circumstances. As a parent, we don’t want our kids to experience what we’ve been through with financial crisis so it is always much better to prepare them at an early age.
I like how you stress on budgeting allowance for needs, wants and charity. It’s a good value that kids should learn and hopefully apply until adulthood. I appreciate this article because I have gained tips on how to teach our kids in handling their finances. Thanks!
Glad that you found this article useful, and keep up the good work training your kids to be financially fit.
Hi Michel
It is never to early to learn about the importance of money, what it can do and what it cannot do. It is important that the child learns that everything has value, to spend within their means and that saving for a rainy day, is just as important.
If you bring a child up telling them that spending is good and teaching them to be materialistic, then the child is doomed to fail. They will not understand anything, just that money can bring them happiness.
I enjoyed reading this article, as it highlighted the best way for children to understand money. Do you think you need to encourage the child by opening a bank account for them?
Thanks
Antonio
I think it is a good idea to open and bank account for your child and encourage him to add to it each month.
Hello Michael. Nice article about teaching kids about money. I don’t believe that the kids will pick up their parents habits because I personally didn’t do that. My parents always saved money for a time in need but I grew up getting what I wanted whenever I wanted. I think that is because there was always someone giving me free money. But even that is not an excuse because my sister was always saving even though she was getting the same money as me.
I think the best way to teach children is through games. There are tons of games these days about everything. I still like playing Monopoly with my sister when I am in the mood. if someone knew to teach me how to get money online when I was like a teenager, I would probably be all ears and not waste time playing games without a plan.
I’m looking forward to your next articles. Keep up the good work.