Money and kids

Teaching kids about money

According to a 2016 T. Rowe Price survey, 71% of parents prefer not to talk about money to their children, while only 22% of kids says they talk with their parents often enough about money and financial topics.

Children just need to understand the basic concepts, like saving, budgeting, paying down debts, and giving to others.

You should start to educate your kids about money when they are still young: they need to learn the financial but you also want to tell your children the value you give them.

They shouldn’t see cash going in and out from your wallet or credit card without any clue how it got there or how quickly it can disappear.

Teaching the value of money from a very early age will help them to reach success later in life.

The advantage of doing this since when they are young will help them to learn how quickly money can disappear if wasted on items they don’t need, how to spend, save and budget it wisely.


Be an example of money management

Money management
The first example your child will learn from is you as a parent. Teaching him how to behave with money will prevent financial difficulty once in his teens and adult life.

You are in charge to talk about money before someone else (TV, reality shows, friends, online, etc). Don’t expect teachers in schools to make your work.

Show your son you don’t waste your money, you don’t put your food into the bin, you don’t go out for dinner every day, to end up having arguments with your partner about the monthly expenses.

Being a good example
will show him that saving is something adults do as well. Many young children want to imitate their parents: watching you doing it yourself will provide him with lessons that can inspire to save.

Pro tip: When he is still very young, put also your money in a jar while your child is watching, and tell him it’s your savings jar.


Family budget meetings

You don’t want to tell your young child how much money you make, but you may want to let her listen to your conversations about budget, monthly and long-term financial plans. You can do this just discussing it while she is in the room.

Talk about the budget when it naturally happens, answer her questions. No need to plan big talks: it should be an everyday life topic. Ask your daughter what she knows about this topic.

When she realizes you’re available to talk her about money, she will start to ask you more specific questions.

Pro tip: Allow your daughter to sit in on and contribute to family budget committee meetings. Just remember, though, that you and your spouse are the adults: only Mom and Dad can make the final decisions.


Weekly allowance priorities

Weekly allowance
Once you set a weekly allowance, tell your son that when the money is finished, he can’t buy anything else. If he wants too many candies or toys, he will not have enough left for a DVD or a video game.

To avoid mistakes, sit down together and ask him to write his wish list of the things he wants to buy with his money. Then help him to prioritize and rank the items in the list by discussing what’s important about each one.

Pro tip: make him create expense to plan for the regular items he usually buys (candies, toy, etc), to make him conscious how much he can spend.


Saving and SpendingSaving money

Once she starts to ask for something more expensive, like a fancy doll or a LEGO kit, if she doesn’t have enough money, tell your daughter to save to buy that herself 
Have your child draw pictures of what she wants on the jar where she keeps her money: this way can help you to make your child conscious that some items will take longer than others to save for.

The short-term savings jar might have a picture of a toy, the long-term one might have a picture of an expensive video game, or a trip to Disneyland. Make her set aside money for short-term and long-term goals, and have another jar for spending on everyday itemslike candies or snacks she is in charge of.

In addition, make a savings goal chart. Once you know what her goals are, make a plan on how many weeks it will take to collect all the money and draw a chart. Represent each week with a box where she can put a sticker when the money is set aside.

When the amount of money to buy what she wishes is enough, tell your child how much it costs and takes the money from the right jar. Take her to the store and let she pay the cashier. She will feel the feeling of accomplishing a goal on her own.

Pro tip: using a clear jar will help her to visually understand when money goes in and out.


I Need, I Want, I Wish. And related Mistakes

Wishes money
Let him understand the difference between needs, wants, and wishes. This will encourage him to buy wisely and to not 
to waste money.

Teach your son not to spend money as soon as he gets them. Before spending some money, he has to figure out in advance why, as well as you do before going to shopping.

Pro tip: get him used to have a 5 minutes conversation in relationship to the reasons why he wants specific items, make him think and write them.


Let your child find the best deal

Once she has saved enough money for the items she wants to buy, help your daughter to look for deals. Look for coupons, season deals, and also online sharing this experience together. Make her compare prices and even consider purchasing used items (eg: books, toys, video games).

Pro tip: get her used to look for the best deal while shopping at the supermarket with you as well. Make her understand the quality/quantity rate of very simple items she knows.


Work to get paidWorking kid

ATMs, credit/debit cards, and wallets don’t generate money
by themselves. Explain to her that to make money and buy stuff you need to work, to put an effort into something.

Pro tip: make your child to be paid for small regular tasks at home.


Commercial and value of the money

Advertising billboards
Make your son conscious about the hidden messages in the commercials
: owning objects don’t buy popularity. Let him understand that companies are trying to get his money. You don’t want your kid to ask the newest toy on the market all the times.

Show your kid how to evaluate TV, radio, online and print ads for toys and products. Will a product really be like and do what the commercial says? Are there other products available that will do a better job, for less, or at a better value? Make him understand that if something sounds too great to be true… it usually is!

Pro tip: let him make a comparison between a kind of food he really likes with no commercial and something he can see on TV but he doesn’t like

Play Games

There are many toys and games available which allow your daughter to learn financial concepts. With Monopoly and The Game of Life she can learn money management skills as well as the importance of planning her expenses in advance.

Also Rich Dad Cashflow for Kids can be a good game focused on money management.

Pro tip: under your surveillance, allow her to manage the yard sale and collect the money.


Manage Money By Age

2-3 years

Manage money
Very young children love to put things into their mouth. When you start to deal with coin, pay attention to what your son
does, monitor him!

While watching them, show how coins are made and denominations, even if he doesn’t still understand their value, he can start to get comfortable with them. Play a game with money, show him colors, shapes and pictures on it and allow your kid to recognize the different coins.

Encourage your toddler to match coin with the picture on it, giving it even a funny name.

Play to trade things, try to set up a store where your little one can sell simple object like fruit, papers, and everyday items. This allows him to understand the basics of how things work.


4-5 years

While learning about money value you can teach her about saving. Give your daughter coupons while you’re shopping. This makes her feel useful and it helps her little mind to understand about saving.


6-8 years

As soon as you give him a small allowance, provide your son a place where to keep the money in. Use a clear jar to save them, show him how money increases/decrease. Assign your kid an expense he is in charge for, such as snacks, candies, or something they are really interested in. This allows him to understand how concrete money is before opening a bank account.

Every time he spends a penny, make him note it and track all the earnings and spendings.

After a few months, he can see and understand how the incomings and expenses work, then help your son to open a saving account. Many banks have free children’s accounts: do regular monthly deposits together with your child.

Money doesn’t need to be just for trading things, they can be an amusement if he starts to collect them.

This is also a good age to take up coin collection as a hobby. Each coin has its own story: check it out on the United States Mint Web site.

9-12 years

While at the supermarket, ask your kid to read the products’ price labels. Ask her to check also the quantity and quality over the price. Buy cheap products with different qualities and quantities, items you really need (we don’t want to promote wastefulness), and talk about if the quality of the product worths its higher price.

Discuss your next yard sale, ask your daughter to define the price of the items you want to sell and talk about them. Make her create the labels.

Put her in charge for the sales and agree with them the lowest price, as you don’t want to lower the worth of items she doesn’t understand the value of. Also, give her the responsibility to collect and count the money from the customers. Keep yourself the loot.

Give her money according to fulfilled chores.

This will help your daughter to understand how money can be earned, not given only. But pay attention! Helping to keep the house clean, set up her own bedroom and something she’s supposed to do shouldn’t be paid: the back side is that she could think that for each activity of her life she will need to be paid and everything can be purchased, small gestures as well.

Earning money is good, but giving is important as well

Teach her giving to others. According to her interests (animals, reading, neighborhood, etc), choose together a charity she can start making regular or random donations to. Donating helps your daughter to understand how she can support someone else and how supporting a cause can be gratifying for the giver too.



Credit card
Support your son
in getting a part time job.

As a teenager he will ask you for more money, why not supporting him in earning it? He can work during his spare time from school: this will allow him to start making money in an environment outside his family and comfort zone.

Credit cards behind the corner

Teach your kid about saving and debt before he will have the age to use credit cards. This will help him to make wiser decisions once credit cards companies and the salesman will approach him, avoiding him to become a debts victim.

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