Many parents worry that teaching kids about money is too complicated for them to comprehend at their young age. That couldn’t be further from the truth! The earlier you teach children about money, the more likely they are to develop good habits without being tempted by bad ones. It is best to start early when it comes to teaching your child to be money conscious.
Set a price limit when buying something for your child and let your child pick out an item in that range.
Teaching them about money while they are young will undoubtedly help them make better decisions as they get older. Many families struggle with teaching their children about money. However, it can be done! Here are some tips for teaching your young child to be money conscious:
- Lead by example. Your child learns from everything you do. It can be confusing to your child if you are teaching them to be money conscious, but you spend money at the drop of a hat. This doesn’t mean you can’t indulge every once in a while, if you have the means, but maybe it would be best to do this when your child is not around.
- Give your child an allowance for completing designated chores. For young children, the tasks can be as simple as picking up their toys.
- Limit the frequency of buying something for your child, such as limiting them to one new toy a month. Explain why you can’t buy your child everything they want. This will help your child understand your actions.
- Set a price limit when buying something for your child and let your child pick out an item in that range. For example, tell them they can pick out a toy, but it needs to be under $15. As your child points out toys in the toy aisle that they like, let them know if it is in the price range you have set.
- Open a savings account for your child and teach them about the benefits of saving money.
Parents are often taught some of the basics of money management, but it is important to teach these lessons again to your children. Children should be taught how to spend their allowance, save some of it, and give back to others. If you teach them these three things at a young age, they will have an easier time managing their money later in life. Start teaching your child these good habits today. Your child will be thankful for these valuable lessons someday.
3 Fun Books for Teaching Kids Financial Responsibility
I love books. And so do my kids. So when I saw “Three Cups” stashed away in a storage room at the library, I brought it home read it to my little ones, and learned that they liked learning from books much better than they like learning from me.
If you’ve got the same situation at your home, there is help for you as well. Today I’m going to share three of our family’s favorite money-related books.
by Tony Townsley and Mark St. Germain
A little boy. Three cups. Adventure forever.
On his fifth birthday, Mark received an allowance and three cups from his parents – they promised that these cups would take him on many adventures. One of the cups was for spending, the other cup for savings, and the other cup was to be used for charity.
Every week, he would divide his allowance among the three different cups: spending, savings, and charity.
He learned a great lesson from his three cups; he learned how to save, spend, and give.
I loved this book. It captures everything that I want my kids to learn: how to be responsible spenders, how to save, and to be charitable.
If You Made a Million
by Davis M. Schwartz
My kids have a grand appreciation for all things magical, so to have a little wizard teach them about how a dollar is four quarters, and a quarter is two dimes and a nickel, and a nickel is five pennies, was pretty great.
It introduces other concepts such as interest, and work; it also gives fun visuals so that kids can see just how much money they would need to take mommy to the movies, or to buy something ridiculous like a hippo farm.
It’s just a fun, helpful book.
Alexander, Who Used to be Rich Last Sunday
by Judith Viorst
That poor little Alexander. Not only has he had a terrible, horrible, no good, very bad day, but now the dollar that he was given by his grandparents has suddenly turned into a pile of remorse.
His dad told him to save that dollar, but instead he made a few bets (and lost); and he impulsively bought gum, a used candle, and an incomplete deck of cards.
This is a hilarious display of poor financial decisions.