You want to make sure that your children learn strong money management skills for the future, but where do you start when it comes to teaching your kids about money? A study conducted by the University of Cambridge in the UK found that children begin forming money and spending habits from as early as seven-years-old. By teaching your children how to understand money from a young age, you’ll set them up with good financial habits for life.
#1. Introduce the Concept of Money:
You can begin introducing the concept of money to children from a fairly young age. From as soon as they are able to count, they can understand simple tasks such as counting coins. Teach them about coins first; show them what each coin means and allow them to save them up in a piggy bank. It’s a great idea to use a clear piggy bank or money jar, as this allows your little one to watch their money grow.
#2. Set a Good Example:
Kids learn by example from a very young age, so one of the best ways to help them develop good money habits is to provide them with positive behaviors to emulate and be a good financial role model for them growing up. Avoid actions such as making impulse buys in front of your children; instead, tell them that you’re going to wait for a day before deciding whether or not you really want something. Kids are very observant and will form many of their money habits by watching you and copying your behavior.
#3. Offer an Allowance:
Offering an allowance to your children teaches them how to budget for the things that they want to buy from a young age. No matter how much you decide to give them as an allowance per week or month, they will need to begin learning basic budgeting and rationing skills. As they start to manage their own small amount of money, they’ll learn highly valuable financial management skills for the future.
#4. Let Them Earn Money:
One of the best ways to truly teach your children the value of money is to allow them to start earning their own from a young age. This could be something as simple as giving them extra pocket money for helping with jobs around the house, starting their own little business, or marketing their services in your local area whether it’s washing cars, gardening, or walking dogs.
#5. Set Money Goals With Them:
Whether they are getting their own money from an allowance, earning it or a combination of both, teaching your children to set financial goals is a great way to help them develop good savings habits. Talk to them about something that they’ve been wanting for ages – perhaps it’s a new toy, a computer game, clothes, or a gift they want to buy for somebody. Then, work out when they would like to be able to buy it, and how much of their allowance or earnings they will need to save each week or month over a period of time to reach the goal. It is a great opportunity to browse deal sites like this one to show them how to shop around for better prices.
#6. Open a Savings Account:
When your child is growing out of their piggy bank, opening a children’s savings account is a great way to help them feel more grown-up about their money and give them more responsibility. This is also a great way to teach them about how interest works, and how their money will grow in a savings account.
How do you teach your children good money habits? We’d love to hear from you in the comments.