Teaching Kids About Money

Like all things in life, it’s good to get a head start. Teaching kids about money is no different. If you’ve suffered from debt and want your kids to learn from your mistakes, it’s best to start teaching good spending and saving habits young, so they can implement them in their own financial lives.

Teaching Kids About Money

This is the time to start teaching kids about money. How money works and what it takes to get it are both important concepts kids should learn. Kids love games. Why not turn money into a game? Work out an allowance, and what it takes to earn it. Help your kids set savings goals, so they learn and understand how saving money and being careful leads to a reward.
Do your kids like going out to pizza or an amusement park? Set an amount of money they need to save or earn and when they reach their goal, let them enjoy their reward. Some exercises can be as simple as making grocery shopping an adventure. Give them part of your list and an amount of money they can spend. Let them try and get all items on their list for the money you’ve allotted them.

Teaching Teens About Money

Once your kids get older and have an understanding of how money works, start giving your teen jobs to do around the house for extra money. Teach them the value of earning money. Make work fulfilling and be supportive. Include your teen in family budgeting. Let them have a say and get involved. Discuss what money should go where in the family spending budget. Get your teen thinking about how money is spent in a household and what it takes to make the household run.

Teaching Young Adults About Money

At this point in your teen’s life, its time to start looking at making big purchases. Mock up car loans and begin budgeting to buy a car. If you’re going to allow your young adult to buy a car, or you’re going to buy one for them, show them what it takes to get a loan. Explain the difference between principle and interest.  If they get a part time job, match what they make for savings. Even if you’re only paying them $.25 per dollar, contributing to the amount of money your teen or young adult earns, it gives them a sense of support.

This is also the time to start exploring credit cards. Teach your kid about lines of credit, minimum monthly payments, and how interest works. Learning about the realities of credit cards at an early age will help your young adult make smart decisions if they decide to get a credit card.  

Teaching College-Age Students About Money

Once your kid reaches their late teens, its time to start talking about college. Do you need to take out college loans? Explore your best options with your teen and make them as much a part of the financial process of going to college as you feel comfortable.
This is also a good time to look into getting a credit card. Credit card companies and banks love college campuses to sell their products. You want to instill confidence and knowledge in your college kid so they aren’t tempted to make a rash decision. This is also the time to create a budget for college living. What are the costs of living, like food and supplies? Create a year and month-to-month budget with your kid so they understand how far their money will go when they begin living on their own.

Teaching your kid good spending habits from an early age will lower the possibility that he or she will go into debt when they turn into an adult. By making money real and fun it will become less intimidating and therefore easier to understand. Implementing good saving and spending habits will ensure your kid will have great financial responsibility throughout their life.