How do we teach children about money? Or, rather, the value of money? Actually, it’s not as easy as you might think…and it’s probably more important that you realize.
When teaching kids about money, there are some tips to make it a little easier to drive the important points home.
For 3- to 5-year-olds, it’s good to teach them:
- You need money to buy things.
- You earn money when you work.
- Sometimes you have to wait before you can get the thing(s) you want.
- Things you want are different than things you need. (One way to do this is to identify wants vs. needs when you are out shopping with your child/children.)
When you have children this age, don’t forget the importance of setting a good example! They’re watching you — so if you are preaching the above lessons, it’s hard for them to reconcile that if you’re going out on shopping sprees with credit cards rather than practicing what you preach.
When your kids are between 6 and 10, it’s a good time to learn:
- You need to make good choices about spending money.
- It’s important to comparison-shop to find the best price. (Don’t forget to teach them about coupons and discount programs!)
- Be careful when online. Sharing credit cards or personal information could be costly — if someone gains access to your passwords or accounts, your money can be taken or your identity could be used.
- Putting your money in a savings account will keep it safe and earn interest for you!
All of these are key points when it comes to teaching kids about money — and they’re good reminders for parents, as well!
- A good rule of thumb is to save at least a dime for every dollar you get.
- The sooner (and the more) you save money, you can earn even more money through interest.
- Using credit cards costs more than you think — similar to a loan, if you don’t pay it back right away, you will wind up paying a whole lot more than planned!
When your kids are teens, it’s important to teach them:
- Their first paycheck isn’t going to be as big as they expect because of taxes.
- They shouldn’t use credit cards to buy things they can’t afford.
- When thinking about college, cost does matter. Will they be able to live at home or will they have to live on/off campus? Don’t forget books (they can be well over $100 per book), a computer, school supplies, and other incidentals. Also, you will want to advise them to not live off of credit cards — or fall into the trap of taking advantage of student offers for credit cards!
- Consider saving your money by investing in a Roth IRA.
Inspired by Genworth Financial.