Personal Finance At Home – Teaching Kids the ABCs of Money
Teaching kids the value of money involves more that basic arithmetic – although that’s always a solid foundation to start from. While generations past may have used pennies and nickels – kids have witnessed their parents use a bevy of financial products including credit cards, PayPal, checks, and that archaic currency form known as cash. A parent’s financial actions play a critical role in shaping a child’s attitude toward money. Despite the way we pay for things have changed, the fundamentals of sound finance have not and teaching children to become regular savers, thrifty spenders, and savvy investors will help them lead a financially fit life in the future.
It Is Never Too Late to Teach Your Children About Money
Teaching children about money is never an easy task. Perhaps you don’t feel confident about your own money-management skills. However, you probably know a little more about directing cash than you think. From the time that children begin comprehending money (which is around the same time they learn to count) until they move out of your home permanently, your financial actions will play a critical role in shaping their attitude toward money. Teaching and encouraging children to become regular savers, thrifty spenders, and savvy investors will help them lead a financially fit life in the future.
- Introduce them to money as soon as possible. If they can distinguish between dollars and coins, they can learn about money. Explain to young children what’s happening when you’re making transactions at the grocery store, the bank, and other places. Observation and repetition are two ways by which children learn.
Read More What To Know About: Teaching Kids About Money
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My wife and I have been using a points system with our (young) kids. They get points for chores and good behavior, and can cash in those points at our “family store” which has a variety of goodies, including trips to MacDonald’s, spending some money at the dollar store, staying up late, etc.. Its been working great giving them some idea of valuation between chores/work and results using the medium of points, which is like our family currency.
Eric, my wife and I use a similar system with our 8 year-old. Though we pay him on commission for work with real money. He has to put at least a dollar in each of 3 envelopes - Give, Save and Spend. With our guidance he gets to save for what he wants, spend on what he wants and give to the charity of his choice. It has been a great system and he has learned from his spending mistakes.
I never seem to have “cash” anymore, so pay directly into my kids’ accounts monthly and show them on an excel spreadsheet how to manage it (they have a certain % that is theirs to do with as they like.) We have a farm and basic chores are expected, but they can go above and beyond to earn extra. Eldest son and daughter (10 and 9) are planning their first business venture with chickens this summer, which I expect will be a valuable lesson in money management and the reality of ‘Net’ income. It’s a tough thing to learn - my husband STILL grapples with it lol.
Very insightful. Thanks for sharing!