More schools are trying to teach children financial literacy and give them the tools they need to make better money management decisions in the future. This doesn’t mean that you should just leave the job to teachers! As a parent, you’ll want to help your kids learn about financial literacy, too. You’ll have much more influence over them than a few lessons at school.
So, how can you teach financial literacy to kids?
Set a Good Example
Kids will absorb your habits. This is bad news if you have some poor money management habits. If you don’t address those habits now, your kids could end up taking the wrong financial lessons into their adulthood.
Say you have a bad habit of not saving for a rainy day. Your kids might notice that when a surprise expense happens, you panic about how to take care of it.
How can you set a better example? First, stop panicking and handle the problem. You could put the emergency expense on your credit card and pay down the balance later. Or you could apply for an online loan and see whether you can use that to cover the expense. Be sure to apply for a loan available in your home state. So, if you live in Hot Springs, you’ll want to search for online loans in Arkansas specifically. Otherwise, you could waste your time applying for a loan that isn’t available in Arkansas.
After resolving the situation, show your kids how you’re putting effort into saving money. Bring them to the bank to watch you deposit money into an emergency fund or collect loose change into a “rainy day” jar. This will show them that it’s important to set up financial safety nets for when something goes wrong.
Your children might not appreciate you sitting them down for a long lecture about the importance of savings accounts, bill tracking and credit. They will probably tune you out.
One of the best ways to approach this topic is through play. When they’re really young, you can start teaching your kids about money by playing store. As they get older, encourage them to join games that feature financial tasks. Get the family to play a long round of Monopoly — this will teach them about banking, rent, mortgages and trading. If they like video games, get them Animal Crossing — this family-friendly simulator will be a great introduction to financial matters like loan payments and credit card rewards.
Give Them Money
Kids won’t learn about money until they use it themselves. So, give them a weekly allowance that they can spend or stash away for later.
Start off small. When they’re really young, give them a piggy bank to put coins into. They can save up these coins to pay for small things like ice cream and dollar-store toys. These purchases are small, but they’ll feel important because they earned them.
As they get older, you should raise their allowance. Take a look at the average allowance rates for kids based on their age. They can stash their earnings in a piggy bank or, better yet, you can open up a bank account for them. They can withdraw these savings with a debit card.
Don’t wait for your kids’ teachers to bring up financial literacy. Teach them about money now!