One of the best skills to teach children is the ability to manage money. The reality is too many people don’t even begin to think about how to manage their money and how to go about making financial decisions until they’re already adults.
Educating children about money matters, even at an early age, can help them grow into adults who are able to be more financially independent. A recent article in the FDIC Consumer News pointed out that “financial education has been linked to lower debt levels, higher savings, and higher credit scores as children mature into adulthood.” Equally important, there is also a connection between financial education and an individual’s net worth and investing.
WAYS TO TEACH CHILDREN ABOUT MONEY
When it comes to learning about money, chances are most children do not want to listen to lectures from economists or have books on economic theory read to them. Fortunately, there are fun and practical ways to get children involved and interested in financial matters.
Children love to play, and they especially enjoy playing games with a parent or parents. Board games that use play money can not only be great fun, they also can be a good way to show children the importance of making good decisions with their money. Look for old favorites or even look online for games for kids that teach about money and use them to start talking to your child about money management as well as simply having fun together!
Let Them “Help” You When You Are Paying Bills
While not as much fun as playing games, including your child when you are paying bills can be an excellent way to teach them about decisions related to money. Letting them see and understand how much money is needed for things they often take for granted, like electricity, the cost of being able to live where they do (monthly rent or mortgage), TV, internet, groceries and more allows you to explain the financial decisions you make each month or each week.
You can also discuss with them how having these kind of bills makes an impact on other decisions, like eating out, or making a major purchase, and whether those are things that make good financial sense for your family.
Taking your child grocery shopping is another good way to start a discussion about finances, especially if you have a budget for your groceries. Your child can then see how your budget impacts your decisions on what groceries you buy and what may have to wait for another time or what simply doesn’t make sense as it relates to the amount of money you have earmarked for groceries.
Talk About Your Job
Your child knows you go to work and maybe they understand what you do while at your job, but your job also provides an excellent opportunity to incorporate some teaching moments as it relates to money.
Work is how you earn money and it’s important for children to understand the connection that work is what enables you to provide for your family and that your income influences many aspects of life, from where you live and the type of vehicle you drive to the kinds of purchases you make.
Open a Bank Account
Opening a savings account for your child can help you explain the importance of saving money. It also provides a good opening into teaching them about all the things a bank does and how it can be a resource for them in the future.
HINT: If you can show your child that you place an importance on saving when it comes to your finances they will be more likely to follow your example.
Helpful Financial Educational Resources
There are free financial education resources covering ages pre-kindergarten through college students.
The FDIC has a Money Smart
curriculum with modules written for specific age groups. There are also children’s books referenced in the modules that can help you start conversations with your child about money.
In addition, the Consumer Financial Protection Bureau has a Money As You Grow program which teaches children how to reach certain age-appropriate financial milestones.
The U.S. Mint also has free games and activities for children. From math games to coin scavenger hunts, you can find all sorts of great resources. The Federal Trade Commission (FTC
) offers free games like The Mall
, which teaches children about advertising, business competition, privacy, and scams.
FDIC Money Smart
CFPB Money As You Grow
US Mint HIP Pocket Change Kids Site