Teaching kids about money is an integral part of parenting. It can help them develop good financial habits that will last a lifetime. Our previous article discussed five things every kid should learn about personal finance. Today, I will write about the first point, Budgeting, in seven different ways.
7 Ways to Teach Kids About Budgeting
Here are seven ways to teach kids about money and budgeting, with longer and more elaborated points to help you make your children thoughtful of money and budgeting.
1. Start early
The sooner you start teaching your kids about money, the better. Even young children can understand basic concepts like saving and spending. For example, you can teach your toddler about coins and bills. You can also let them help you put away groceries or do other chores around the house in exchange for a small amount of money.
2. Be a role model
Kids learn by watching the adults in their lives. If you want your kids to be good with money, you must be good with money. Show them how you budget, save, and spend your money. For example, you can talk to them about your financial goals and how you are working to achieve them. You can also let them see you are using your credit card responsibly and paying your bills on time.
3. Talk to your kids about money
Don’t be afraid to talk to your kids about money. Answer their questions honestly and openly. Explain how much money you make, how you spend it, and how you save it. For example, you can talk to them about how you make a budget and stick to it. You can also talk to them about the difference between needs and wants.
4. Give your kids an allowance
An allowance is a great way to teach kids about earning, saving, and spending money. Start with a small allowance and gradually increase it as they get older. For example, you can give your child an allowance for doing chores around the house or getting good grades. You can also let them choose how they want to spend their allowance.
5. Help your kids set financial goals
Once your kids have some money, help them set financial goals. This could be anything from saving up for a new toy to saving for college. For example, you can help your child set a goal to save $100 for a new toy. You can also help them create a plan to reach their goal, such as setting aside $5 each week.
6. Make it fun
Learning about money doesn’t have to be boring. There are lots of fun games and activities that you can do with your kids to teach them about money. For example, you can play a game of “store” where your kids can earn money by doing chores and then spend their money on pretend items. You can also use online resources, such as Khan Academy Kids, to teach your kids about money in a fun and interactive way.
7. Be patient.
It takes time to learn about money. Don’t get discouraged if your kids don’t seem to get it immediately. Just keep talking to and teaching them; eventually, they’ll get it. For example, don’t get angry if your child makes a mistake with their money. Instead, use it as an opportunity to teach them a lesson about money.
Additional Tips for Teaching Kids About Money and Budgeting
- Use real money, not play money. This will help them understand the value of money and how it can be used.
- Let them make mistakes. Everyone makes mistakes when they’re learning something new. Let your kids make mistakes with their money so they can learn from them.
- Be positive. Don’t make kids feel bad about their mistakes. Instead, use them as opportunities to teach them more about money.
- Make it a family affair. Get the whole family involved in learning about money and budgeting. This will help create a positive financial atmosphere in your home.
5 Books to Help Your Kids Learn About Money
- “The Berenstain Bears’ Dollars and Sense” by Stan and Jan Berenstain This classic children’s book uses the Berenstain Bears to teach kids about the basics of money, such as earning, saving, and spending. The book is full of colourful illustrations and simple text that is perfect for young readers.
- “Alexander’s Money Adventure” by Linda Sue Park This story follows Alexander, a young boy who learns about the value of money after he finds a $10 bill. The book explores saving, spending, and generosity themes and teaches kids the importance of making wise financial decisions.
- “The Money Tree” by Laura Numeroff In this rhyming story, a young girl plants a money tree and learns about the importance of saving and investing. The book is full of humour and adventure and teaches kids about compound interest’s power.
- “Piggy Bank: A Financial Fairy Tale” by Emily Jenkins This fairy tale follows a young pig who learns about the importance of saving money. The book is full of colourful illustrations and simple text that is perfect for young readers.
- “The Kids’ Money Book: A Fun and Easy Way to Teach Your Kids About Saving, Spending, and Giving” by Jean Chatzky This book is a comprehensive guide to teaching kids about money. It covers everything from the basics of earning, saving, and spending to more complex topics like investing and credit. The book is written in an easy-to-understand style and includes many helpful tips and advice.
Teaching kids about money and budgeting is an important part of parenting. Following these tips can help your kids develop good financial habits that will last a lifetime.