Teaching kids about money:  5 Tips every family can use

by Lee Rose Emery

make money kidsTeaching kids about money is not easy. Watching parents plunk down a credit card time and again is an incredibly abstract idea for a kid, and makes them think the card itself has value, with no connection to the idea of having a bill ever come. So how does one try to help them understand about saving and spending wisely? Here are a few tips I’ve found to be incredibly helpful with my own kids, who have very different styles and personalities in life and in terms of money. I’m no financial expert, but I have seen how my kids are starting to develop an awareness of money and its value.

1) Start with allowance at a young age.

If kids have even a little money of their own they can start to learn what is like to make decisions and choices about spending.

2) Help them save up for something.

When the kids actually have a stash of their own money stored up I find we discover so many “teachable moments.” My daughter, who never spends frivolously was able to save $600 to put towards a macbook pro. www.apple.com

(She canvased her grandparents, aunts and uncles to make up the difference one Christmas.) It was so empowering for her to have a financial goal, and to attain it. To this day, her laptop is her prized possession that she feels so proud of and takes extra good care of. My son is not a saver by nature, but still, having an allowance has helped him to understand about making choices. Even blowing a few bucks on a cheaply made toy that broke moments after he bought it was a great lesson.  He was obviously disappointed, but said, “What a waste of money. “ I know he will think twice next time.

3) Encourage giving.

We try to encourage our kids to keep some money aside to give to a charitable cause. We help them pick a cause that means something to them. In Los Angeles, our family loved www.Pablove.org, an organization which fights childhood cancer with love, raising money for research and to help the quality of life of those living with cancer.

teaching kids money4) Encourage Entrepreneurism.

A lemonade stand, a bake sale, a craft fair, all provide opportunities for kids to make something and reap the profits. My daughter makes sea glass necklaces in the summer and sells them. My son loves to run a lemonade and cookie stand. I also try to point out that they need to consider deducting the price of their supplies when calculating their profits! But the overall experience of making something to sell is a great one for them. Show them a site like Lindsay’s Necklaces to inspire them on how a home-grown business can do great things.

5) Model making good choices and include them in the conversation.

I think talking about something that you would like to do or buy with the kids is a great way to show them that financial planning is something that they will be doing their whole lives. If we do a weekend ski trip, then we will not go out to dinner the month before. The dialogue can actually be like a game to them. Recently when my daughter needed some new summer clothes and we were ordering online I said, “Ok, here’s our budget, and we chose accordingly.” It was actually kind of fun.

Here’s a link to a great piece on Kids’ Free Allowance Apps that are very useful. http://www.mnn.com/money/personal-finance/blogs/kids-and-money-5-free-allowance-apps

Have any tips or ideas on how to teach kids about money? Would love to hear them in the comments below.

{ 2 comments… read them below or add one }

Julie August 19, 2013 at 1:25 pm

A great set of tips! It’s so important for kids to get a handle on money early to avoid running into financial trouble later in life. Certainly, the schools don’t seem to teach those practical tips, so it’s up to the parents.

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Laura Wallis August 19, 2013 at 5:35 pm

Our school has a constructivist model so they try, but it’s so important to incorporate it into our daily routine, too.

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