Six ways to teach children about money

Teaching kids about the value of a dollar can help prepare them for the real world ahead.


Here are six ways to help kids get a head start on financial responsibility.

Save, save, save – Sure, it’s not the most exciting lesson to learn, but it may be one of the most important, especially in an age of immediate spending and gratification. Explain the value of setting aside some money through real-life experiences. Instead of an allowance, you can call it a “commission” and allow them to earn their commission by doing household chores.

Help them open a lemonade stand so they can learn about earning their own money. Take them to the bank with you and show them how to make deposits, withdraw money and open a savings account. Opening a savings account will also help them understand that by making regular deposits, their balance will grow exponentially through compound interest.

Budget and expenses – Most kids don’t realize how quickly expenses add up, but teaching them how to live within their means at an early age is important. Help illustrate this by having them keep a log of things they buy and review it with them at the end of each month. You can take it a step further by adding a “reason for expense” column to point out items they could have gone without.

Have some fun with budgeting by using games, such as the board game Monopoly, to teach them about money management. Another fun way is to give them a grocery budget. Give them a maximum amount of money they can spend, take them to a grocery store and have them write down the items they’d like to purchase as well as the price for each item. Whoever gets all (or the most) of their desired items within the allotted budget wins the game. This can also help teach them about watching for sales.

Credit – It’s important for kids to know exactly how credit can impact them down the road if they’re not careful. If your child ever wants to purchase a car or home of their own later in life, it will be essential for them to understand how credit works and how to avoid poor credit. Help them understand buying with credit is not the same as buying with cash, and with credit, they could actually end up paying a much higher amount because of interest rates.

Interest rates – Interest rates can be complex, even for adults. Explain to children how a small investment can help their money grow over time by simply not spending it, and the sooner they start saving, the better. On the other side of the coin, they should also learn how credit cards with interest rates can leave them deeper in debt if the balance isn’t paid. Wants vs. needs – To most children, nearly everything is a “need.” Make this a fun, interactive lesson by having them look through the Sunday paper or a magazine with you and point out items that are needs vs. wants.

College tuition – When your kids are older and trying to decide on a college or university to attend, make sure they know how much each school will cost and how much you’re able to contribute to their education. Several college websites have a net price calculator, which will help estimate how much financial aid they may need. You may also want to explore scholarship opportunities with them. Reach out to the financial aid office at their preferred colleges or universities, talk to their high school counselor or do some online research to see if scholarships are available. Having these conversations early will help give them a better idea of where they may apply.



WBTL-0747 (Apr. 19)

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