How your kids think about money early on in life can greatly affect their financial success later on down the road. Good financial habits start at home and there are plenty of ways that you can teach your kids about money. Starting early is the key to success, and we’ve composed a few tips to help you get the conversation started and to help you create a few activities.
1. Provide options when talking about money
How many times have kids asked for something, only to be told no because the item or activity was too expensive or there just wasn’t enough money to cover it at that time? While it’s good to be honest about money, saying the item or activity is not affordable can create a negative association with money, especially with younger children.
Instead of simply saying “no”, try providing kids with options. For example, if the child wants an item that’s very expensive, propose getting rid of toys or items that they no longer use to help cover some of the costs. By doing so, you’re teaching kids to make financial choices, while also empowering them.
2. Let kids earn their own money early on
Whether it’s an allowance for doing chores such as cleaning, or selling lemonade for change, letting kids earn their own money helps them understand how financial transactions work. At the same time, children who earn their own money are able to feel proud that they earned the money they are spending.
3. Help them manage money
Once kids are on their own, they will need to figure out their income and expenses. While they’re still young, it’s a good idea to open a junior banking account so that they can start to understand the process of how money should be managed.
By teaching your kids good financial habits early on, it will help them be more prepared for when they’re out on their own later in life. In the meantime, it will also give you and your children an activity to work on together than you both can learn from.