Understanding the value of money and learning how to use funds properly are crucial life skills. From setting financial goals to budgeting and saving, teaching your kids about money is an important component of their education – and one that plays a vital role in helping them build a financially healthy life.
But how do you make this concept fun and engaging? Here are some fun ways to teach kids the value of money that won’t feel like a chore! From interactive games to educational activities, these strategies are sure to help your kids understand the importance of money and how to manage it.
Why Teach Kids About Money?
Today, it is estimated that over 35% of American adults are financially illiterate. This lack of financial knowledge isn’t something to be overlooked: not knowing how to properly manage money can increase the chances of dealing with debt and prevent you from building long-term wealth. Because of this, it is important to teach your kids how to manage their financial resources as early on as possible.
Personal finance knowledge gives children an education that they may not get in school, but one that is just as important for their long-term success.
5 Strategies To Talk to Your Kids About the Value of Money
Developing a healthy relationship with money is essential for adults, but it’s never too early to start teaching young kids budgeting basics. In this blog post, we discuss five proven strategies to talk with your children about the value and importance of money.
You’ll find tips on how best to approach difficult conversations around finances and how to instill positive lifelong habits in your family.
Involve Them in the Family’s Finances
Involving your kids in the family finances is one of the best strategies for teaching them the value of money – and you can turn it into an activity that brings the whole family together!
For example, you could start by involving them in your family budgeting plan, paying bills, or shopping at the grocery store.
Doing so can give them a better understanding of how and why money needs to be managed with practical examples.
Start With a Piggy Bank – But Go Further!
A piggy bank is something that many of us have fond memories of. This can be an excellent tool to help your little ones understand the basics of saving and spending, as they learn how to deposit coins and notes into the box, or build up budgeting skills over time.
What’s more, consider adding some tangible experiences too: go together to withdraw money from the ATM, write checks at the store, or visit the bank. This can help lay down a solid foundation for their financial literacy journey!
Make It a Game
Game-based learning is an age-old way of teaching kids about basic financial principles. For example, introducing them to concepts like earning money, making decisions about how it can be invested, and setting goals for longer-term saving makes learning fun and engaging.
Create fake currencies such as “cupcake coins” that children find entertaining in order to get them to practice their financial awareness and decision-making skills.
Encourage Them To Save and Spend Their Savings Wisely
Give your children an age-appropriate allowance. For example, you might give them an amount that equals half of their age each month, and give them a $0.50 raise on their birthdays. This allows them to begin saving, making purchases for themselves, and learning the ropes of budgeting.
Some ways in which you can guide them in the process include:
- Explain why it’s best to wait for sales, use coupons, compare prices
- Lead by example and show them good spending habits
- Teach them that if they wait and save more they can afford what they want
Help Them Understand Key Concepts, i.e.: Credit Cards
As your kids grow up, make sure to keep up with your goal of helping them become financially literate. For example, you can start to teach them about mortgages, personal loans, balance transfers, saving accounts, and interest rates.
Make sure to help them understand how to use a credit card and how credit card cash-back rewards work so that they can avoid debt and make the most of this tool.
Consider Taking a Financial Literacy Course
Educating children about money is a life-long process – and one that comes with its own set of challenges! If you are struggling to help them understand the concept of money, make sure to partner with a financial advisor or invest in a financial literacy course for kids or adults!