Helping your child learn how to be smart with their money can start at an early age, with their first piggy bank. Teaching your children lessons about living within their means and saving for a goal will not only help them learn about the value of a dollar now, but will help them when they are old enough to venture out on their own. Here are some ideas:
Start with a piggy bank
Encourage your child to collect change in his or her own bank. Once every couple of months, sit down and count the coins together to see how much it equals. Use a small amount to buy a treat, then put the rest back into the bank. This gives a tangible way for kids to learn how money adds up.
Give them chores
Kids like to be rewarded for a job well done. Give age-appropriate chores like putting toys away, emptying wastebaskets or dusting. Set up a chore chart that ties tasks to a dollar amount. This teaches kids that they can be rewarded for the effort and work that they do.
Give an allowance
As kids get older, they will learn how to manage money by having some money to manage. Instead of handing out a dollar for every candy bar they want, set up an allowance system. Determine an amount you can afford and have them pay for special extras with that fund. If they want a toy, a treat or a video game, show them how long they will have to save to buy it.
Add up prices
At the grocery store, challenge kids to find the cheapest apples or pasta sauce. Teach them how to read the price per unit tags on the shelf. Have them do the math – are two small cans cheaper than one large can? Make a game of clipping coupons and adding up prices.
Look for board games like Monopoly or Life that involve skills like counting money, saving for a goal and learning about the value of real estate.
Discuss wants versus needs
When a child is young, everything they want is critical – whether it’s the latest comic book or an ice cream at the mall. Teaching them the difference between wants and needs will help them learn how “critical” each thing is. Needs are the basics – where they live, the clothes they wear and the food they eat. Wants are the extras, like movie tickets, candy in the checkout line and a trip to the toy store.
If your child has his heart set on a $40 video game and gets a $10 weekly allowance, help him set up a plan to reach his goal. Does he want to save his full allowance each week? Does he want to spend $5 each week on other things? Coming up with a goal for something he wants will help make goal-setting real.
Offer savings incentives
If your child has a big goal, like an expensive pair of sneakers, help your child set up a savings plan. Help motivate her by offering to match her savings or a portion of it if she reaches a certain goal. Think of it like this: It’s like a company offering matching contributions to a retirement plan, in order to motivate an employee to save.
Help them learn from mistakes
If your children blow all their allowance before the week is out or spend it on expensive toys that they aren’t happy with, let them learn from their mistakes. Creating a teachable moment will help them grow up to be smarter with their hard-earned money.
Teaching your children about the value of money, how to save and how to set goals will pay off in the future.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.