Teaching Your Child the Importance of Money

At a certain age, we all learned that money wasn’t just green paper that came out of a machine when our parents wanted it. It’s around that time children need to start learning about the importance of money. Children need to understand how money works and why handling money correctly is a skill. As a parent, certain topics can come with a few speed bumps and it’s difficult to know how to get started. Here are a few ways to start teaching your children, at any age, about the importance of money:

Saving Money

The most important lesson anyone needs to learn about money is how and why to save it. At a young age, children are often given birthday money or money from visiting grandparents. This is a great time to teach them about savings. Start with a savings jar or piggy bank to keep their money in. This will demonstrate the growth of their money over time if they keep saving. It’s best to use a clear piggy bank or jar to give them visual of how the money adds up over time. As it up, talk about it with them and make a big deal about it growing. Even if it’s just a few dollars or a few quarters more, it’ll show them the power of saving.

Money is Earned

Later down the road, usually, when they’re entering their teenage years, the birthday money will soon give them the luxury of thinking they don’t have to do anything to receive money. This would be a good time to show them that money has to be earned. Avoid giving them an allowance. Instead, have them earn the money and pay them commission from chores and helping out around the house. This can be done for younger children as well if you feel comfortable with them doing light housework like dusting or taking out the trash.

How to Spend It

A lot of the time, when they have earned their money, children are going to want to buy the first thing they see. It’s important to teach them not to indulge in impulse buys and show opportunity costs. This basically means that you have to explain that if they buy those expensive earrings, they won’t have enough to buy their back-to-school clothes or the pair of shoes they’d been asking for. This will also show them that everything costs money and has a value. By taking the cash out of their own savings and spending their own money, they’ll have a better understanding of its value and to spend it responsibly.

Be an Example

It’s important to practice what you preach. If your child sees you not saving your money, giving into impulse buys and not spending responsibility, they will pick up on these same habits. Set a good example for them and demonstrate that you have an understanding of the importance of money by your actions. If you give them a savings jar, have one of your own to show them. Also, keep in mind to not argue about money with your spouse. Kids can easily pick up on this kind of behavior and be the same way when they are older. Whether they’re a toddler or teenager, how you treat money is how they will too.

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