Money and good financial habits don’t have to be taboo subjects with your children. In fact, teaching kids healthy money habits when they’re young can set them up for success later on. Plus, learning these habits can be fun for kids of all ages––especially when there are risks and rewards involved.
Play responsibility games with money
Games involving finances can grow as your children do. When kids are young (think two and three), have them identify the value of coins by tracing them on paper and having them match the value to size. As kids grow, you can play store using fake coins and bills. And have them be your coupon helper in the grocery store. You can also start introducing good habits with debit and credit cards by showing your child the difference between the two and playing games that take credit.
If you have an annual yard sale, you can put your older child in charge so “they can handle much of the responsibility while learning about setting a value, making decisions, and helping you haggle with customers over prices.”
Teach them how to budget
It can be easy for kids to see items they want in the store and beg you to buy them. Or spend their allowance all at once. When you teach kids how to budget, you can “talk to them about smart shopping techniques, balancing wants vs. needs, comparing prices, clipping coupons and watching for sales.”
The sooner they understand a budget, the more likely they are to stick to one.
Encourage saving
Part of having good financial habits is being able to save money. When kids are younger, you can start by putting money into clear jars (rather than opaque piggy banks), so they can visualize their money growing. Once you give an allowance, encourage them to set aside up to half of their money to save for long term goals (like that new remote control car they’ve wanted). You can encourage investment when savings grow and show them “how the financial markets work.”
Make chores a lesson in earning
Children don’t have to dread chores if they come with specific rewards. The average age when chores begin is eight, and “sixty-one percent of parents pay their children an allowance, averaging $16.25 per week.” While the age and specific amount will vary from household to household, the concept can stay the same––learning the value of money.
One article suggests calling the money earned for these chores commissions rather than allowances that are “based on chores they do around the house like taking out the trash, cleaning their room, or mowing the grass.” Tasks that help show money is earned.
DEXSTA youth and teen savings plans
At DEXSTA, we wholeheartedly believe in the importance of teaching good financial habits to children. That’s why we created our youth and teen savings plans: so you can begin as soon as your child turns six. With features like prizes for depositing money and movie punch cards, children can achieve financial goals at young ages. Because we think starting early is starting strong.