“I wish I would’ve known that when I was younger.”
Have you ever heard someone say that – especially when it comes to money?
Sadly, some kids grow into adults who don’t know the basics about managing money – whether it’s how to manage a checking account, creating a budget, or simply understanding the importance of savings.
As parents, we don’t want to just raise good kids – we want to raise kids who become successful adults. And a good portion of that has to do with how they view and manage money.
Thankfully, there’s a lot you can do right now to prepare your kids to be an adult with a healthy view of finances.
Here Are 5 Practical Ways to Teach Money Management Skills to Kids
1. Help them understand the value of money.
This starts at an early age. Don’t just give them an allowance. Instead, tie that allowance to their weekly and daily chores.
Some chores might be required just as part of being in the family – maybe keeping their room and toy closet clean. While others might bring an allowance – tasks like taking out the garbage or mowing the lawn. How you assign these chores is up to you. The important thing is getting them to understand the value of money.
As they get older, you may consider signing them up for a basic banking account to save money. While you may still pay for certain things, let them use their own money to save for bigger purchases, like that game console or the expensive baseball bat.
2. Teach them how to budget.
The budget is the foundation of your finances. Teaching your kids how to make one at an early age is an excellent way to set them up for future success with money. It doesn’t have to be complicated because they’re likely not spending much anyway.
One of the most basic budget methods is the zero-based budget. This is where the total income and outgo equal zero. So if they are making $30 a month on allowance, all $30 of that income is assigned a category.
It could be as simple as $10 on spending, $10 on savings, and $10 toward giving to a charity or your church. How you break down that $30 into percentages is totally up to you and your child.
3. Let money be fun.
Managing money doesn’t have to be spreadsheets and budgeting checklists. You can actually make it fun – and that’s especially important if you want these lessons to stick with your kids.
You can use fun, educational apps that teach them money management with visuals. Some apps, like Piggybot, have a virtual piggy bank you can use to let them see how much they are saving and track their allowance money.
It’s even okay if you get involved. Think about ways you can reward them for reaching a savings goal. Maybe taking them to their favorite restaurant or buying a reasonably priced item for them as a reward.
The more fun your kids have with money, the less it will seem like another chore. That’s a win-win for both of you.
4. Encourage age-appropriate jobs.
Obviously, your 8-year-old isn’t going to be clocking in at Walmart. However, you can encourage them to do small jobs, outside just their allowance-related chores, that allow them to make even more money.
Smaller kids might think about the traditional lemonade stand, pulling weeds, or raking leaves in the fall. You might even let them round up toys they’ve outgrown for you to sell on an online marketplace – or even donate to places like GoodWill. Of course, older kids can take on more responsibility – from more extensive lawn care to pet sitting and eventually working at a grocery store or restaurant.
The sooner you get them connecting work with money, the more of a foundation your kids will have to build on as they move away to college and into the adult world.
5. Make giving a priority.
Whether it’s a local church, a charity, or someone in need down the road, allowing kids to learn the value of giving is incredibly important.
And, most importantly, let them give from their own money. As part of the budget, set aside an amount every month to do just that.
Giving allows kids to focus on others and realize the world is much bigger than they may realize. By attaching that giving to specific stories of need by real people, like one provided by a charity, they can begin to see that world through other people’s eyes.
Giving also teaches humility and helps counter self-centeredness. It’s an excellent way for kids to see what really matters in life.
Start Empowering Kids Today
The key with all these ways to teach money management is just simply meeting your kids where they are. Every age will bring different situations, which will bring different opportunities to teach.
When you and your kids are on the same page about money, you’ll be off to a great start in building your relationship with them as they grow into adults.