If you have kids, you probably try to teach them everything you can to make their life easier, right? Money is definitely an area where sharing your wisdom can set them up for a lifetime of smart financial decisions. (If they’re teenagers, they’ll probably act like they don’t listen to a word you say, but it does sink in!) Here are 5 key money lessons to share with your kids in fun and practical ways.
1. The value of money
Understanding the value of money is the cornerstone of financial education. Kids need to learn that money has to be earned and has value, as it can be used to pay for goods and services.
Start with a simple allowance system where your kids earn money by doing chores around the house. Explain how different tasks have different values, and let them save up for something they want. This helps them grasp the concept that money doesn’t grow on trees and that it takes hard work to earn it.
This part will only work if your kids are fairly young, but it’s one of the most fun money lessons… set up a mini ‘store’ at home with toys or treats priced with fake money. Let your kids ‘earn’ money and then spend it in the store. It’s a fun, playful way to illustrate earning and spending.
2. Saving for the future
Saving is an important habit that is key to financial stability and security. Teaching kids the importance of saving helps them understand delayed gratification, discipline, and the benefits of planning for the future.
Introduce a piggy bank or a savings jar where they can stash part of their allowance or gift money. Explain the idea of setting savings goals for things they want to buy in the future, like a new gaming system or a fun day trip.
Create a savings chart with stickers. Every time they save a certain amount, they add a sticker to the chart. It’s a rewarding way for them to track progress and stay motivated.
3. Budgeting basics
Budgeting helps kids learn how to manage their money and make good spending decisions. It’s all about understanding where their money is going and planning accordingly.
Help them set up a simple budget. Map out categories like spending, saving, and giving and what expenses fall under each one. Discuss how much they want to dedicate to each category and why.
Use colorful envelopes or jars labeled with different categories. Each week, help them distribute their allowance into these containers. It makes budgeting tangible and easier to grasp.
4. The power of giving
Teaching kids about generosity and the joy of giving helps them become compassionate and socially responsible. It’s important they understand that money can be used to help others and make a difference.
Encourage them to set aside a portion of their money for charitable giving. Discuss different causes and let them choose where they want to donate their money.
Participate in a charity project as a family—have a bake sale or a garage sale, the proceeds of which go to a chosen charity. Involve your kids in the whole process to show how their efforts can make a difference and help others.
5. Making smart spending decisions
It’s important for money lessons to teach kids that spending money wisely means making choices and prioritizing needs over wants. It’s about being thoughtful and discriminating with their money.
When your child wants to buy something, discuss whether it’s a need or a want. Encourage them to think about their decision and consider if it’s really worth spending their money on.
Play a game where they get a certain amount of fake money and have to make choices on what to buy from a selection of items. Discuss why they made those choices and what they might do differently next time.
