Instilling a positive relationship with money in children is crucial for their future financial wellbeing. Introducing healthy financial principles and practices early on can set them up for success. Here’s how and when to start, along with some tools to help.
Early Foundations: Ages 3-7
Introduce Basic Concepts:
- Saving Vs. Spending: Use simple language and examples, such as saving coins for a toy or spending them on a treat.
- Needs Vs. Wants: Explain the difference using everyday items, like groceries (needs) versus candy (wants).
Tools To Use:
- Piggy Banks: A physical piggy bank can help young children understand the concept of saving.
Building Skills: Ages 8-12
Teach Budgeting & Goal Setting:
- Allowance Management: Use allowance money to teach budgeting and prioritizing expenses.
- Goal-Oriented Savings: Help them set short-term goals, such as saving for a special item, and plan how much to save each week.
Tools To Use:
- Budgeting Worksheets: Printable worksheets or apps like FamZoo can help children practice managing a budget and understanding money flow.
Advanced Concepts: Ages 13-18
Introduce Complex Financial Skills:
- Understanding Credit & Debt: Discuss the basics of credit, interest rates, and the importance of managing debt responsibly.
- Investment Basics: Introduce the concept of investing, savings accounts, and how interest can grow over time.
Best Practices For Teaching Kids About Money
- Lead By Example: Model good financial behavior by managing your own finances responsibly.
- Make It Fun: Use games and interactive tools to make learning about money enjoyable.
- Encourage Open Discussion: Foster an environment where children feel comfortable asking questions about money.
Introducing healthy financial principles at a young age can help children develop a positive relationship with money. By using age-appropriate tools and practices, you can equip them with the skills they need for a secure financial future.
References
- Khan Academy – Personal Finance Courses
https://www.khanacademy.org - GoHenry – Financial Education for Kids
https://www.gohenry.com - PiggyBot – Money Management for Kids https://www.piggybot.com
