I think, depending on the child, at around age 4-5 kids start to understand that money doesn’t grow on trees and has to be earned. That makes this age a fantastic time to start teaching your children simple money lessons.
Here are the best ways to teach your kids about money.
Teaching Through Example
I honestly feel that there is NOTHING more important than leading by example. If you are good with your money your kids will notice. (However, you do need to be open enough to discuss how your finances work.)
I’m sure if you have kids that you know that they like to imitate what they see their parents do. If they see you read then they want to read. If they see you constantly baking they want to bake. If they see you training dogs they want to train dogs.
If they see you mindlessly spending your money they want to spend money. And if they see you saving money they want to save money.
My oldest daughter already operates just like I do when it comes to money. She is super thoughtful when it comes to spending and ends up saving 90% of the cash she’s given as gifts. (Okay, maybe she’s an even BETTER saver than I am!)
Lead by example. Your good habits will rub off on those closest to you.
Give Your Children Spending Opportunities
During the summer one of our fun activities is taking the girls to the flea market, giving them each $10, and letting them pick the items they want and pay themselves.
My youngest finds what she wants very quickly and is always quite content with her purchases. My oldest daughter will take forever to spend that money. Regardless it’s fun for them to see exactly what that amount of money buys and counting out their cash and paying themselves is a great lesson.
Open Up a Savings Account for Your Child
I’ve had savings account for both of my girls for a while. But for the longest time they just sat there and I didn’t add anything to them. A couple months ago I put each account on an auto-deposit of $50 per month.
As I was writing out a monthly money report for my husband my oldest daughter noticed her name next to a $211 amount. She was thrilled and thought that was the coolest thing ever. She was rich! Now she’s ready to work so she can put more money in the account.
If you’re saving for your child give them the option to add money and then give them regular updates on what their balances are.
Also, if your kids are school aged see if there is a savings account program. Both of my daughters have the ability to deposit money into a savings account at school once a week. Just giving your kids (or letting them earn) $1-$2 per week to deposit can inspire them to become savers.
Teach your Kids About Money By Educating Yourself
There are a couple of good books you consider checking out if you’re interested in educating your kids about money. First, you definitely need to get a copy of Dr. Spock’s Baby and Child Care. While not specifically money focused, the book is a childrearing classic, its gone through nine editions and helped hundreds of thousands of parents.
The next book you’ve got to read is Rich Kids: How to Raise Our Children to Be Happy and Successful in Life by Tom Corley. Corley got famous through his studies of millionaires. What Corley found was rich millionaires could be distinguished from the working poor by their habits, e.g the things they did on a daily basis. Corey summarized his work in Rich Kids and laid out the best ways to teach kids about money and success. Definitely get a copy.
What tips do you have for teaching kids about money?