Teaching Children About Money Now Pays Dividends Later
Managing money isn’t easy. Learning about handling money as an adult makes it even more challenging. Teaching kids about money early on will help them to become more financially independent as they get older. Financial education is linked to lower debt levels, higher savings, and higher credit scores as children mature into adulthood.
Parents are the primary influence on a child’s future financial well-being because they have many occasions to communicate information, set powerful examples, and involve children in activities that teach them financial skills. Parental involvement in their children’s financial education has long-lasting effects.
Different ways children learn about money
One of the best ways children learn is by observing. Chances are, you go to work to provide for your family. Your child can see that a relationship exists between work and money. Have a conversation with your child about how your job and earnings influence your purchases, where you live, and how you get to work.
Another great way to teach your children about money is by including them when paying bills or discussing large purchases. Family financial meetings can teach children about the financial choices you make and why you make them. Depending on the age of the children, try to put it in terms they understand. The main idea is to teach them the importance of budgets and making choices with your money.
Children learn about money by doing. By having your child participate in a trip to the grocery store, they can see how budgeting relates to shopping. You might open a savings account online to provide an opportunity to teach about saving money, especially if they see you save as well. A trip to your local bank to show them where their account is and what a bank does can prompt conversations about money. If your child operates a lemonade stand, has a cookie sale, dog-sits, or babysits, use these occasions to teach about earning, spending, saving, and donating.
Children can learn about money by reading with you. Several children’s books currently on the market teach all about earning, spending, saving, borrowing, and donating. These books provide opportunities for questions and answers. Check your local library for suggestions; you may be able to check out books online with your library card. You may also be able to read books online through other free services.
Children learn about money by playing, especially if you are playing with them. Board games with play money can be great teachers. Online games provide a fun way to teach about money and start money conversations.
Having open conversations about money with your children, shopping with them on a budget, reading to them about money, and playing money games will have a lasting effect on their ability to manage future finances.