It is never too early to begin teaching your children about the importance of money management. Financial skills are an essential part of navigating life and our children should be taught the basics about money.
Studies suggest that the money habits of children are formed by the age of seven and that they can understand concepts like saving and spending as early as three years old. Although money management may not be a part of your second grader’s curriculum, there are various online games and resources to educate your children at a level they will comprehend and have fun doing it. Here are a few ways to demonstrate to your children the importance of managing money.
Encouraging your children to earn their own money can be informative and empowering for them. Puffed up with pride and accomplishment, their hard-earned dollar is important to them.
If you already have a list of chores your kids are accountable for create additional chores that are optional for them to do so that they can earn an allowance. Create a fun chart to record their progress by using a plastic sheet and colorful permanent markers. Draw a chore chart with sections for each day of the week and their worth. Then have your kids color a picture on a piece of construction paper that can be displayed inside the plastic sheet. Display each chore chart where the whole family can see and tally your children’s completed chores with a dry erase marker. You and your children can calculate the earnings together at the end of each week.
This activity can help your children recognize the difference between the chores related to being part of a family, which are unpaid, and any additional work they do.
Create a Savings, Spending, and Sharing Jar
When your kids receive money for a chore or special occasion, have them split the money equally among the three jars. Encourage your kids to make big purchases from the savings jar, small purchases from the spending jar, and donate from the sharing jar.
Teach your children the importance of patience by discussing why it is necessary to wait before receiving what they want. Whether it be standing in line for an ice-cream cone or waiting for a turn on the neighborhood swing set, cultivating the conversation with your little ones helps them understand the importance of waiting and the reward that is later associated with it.
Encourage your child to save toward the toy he or she really wants. For younger children, be sure that the goal is financially attainable within a short period of time to eliminate frustration and confusion. Setting your child up for success is key in demonstrating how rewarding it is to achieve a goal.
Another way to teach your child the reward that comes from achieving a goal is to have a family savings contest. Give each child a savings goal and have a special prize for the first child to achieve their goal. You can come up with new goals each month and creating a fun and competitive atmosphere could assist them in making the right savings decisions.
Keep Your Kids in the Conversation
When purchasing products explain to your kids why you purchased the off-brand versus the brand name or why you purchased a product in bulk. It is important to keep your kids in the conversation to teach them what deals are and how to stretch their dollar.
The next time you are at the supermarket give your child a few dollars to pick out a cereal for breakfast. This activity teaches your child how to make decisions with a limited budget.
Donate and Volunteer
Teaching your child how to manage money is also a great opportunity to explain the value of giving. Have your family raise money for a charity or volunteer at a food bank.
Once enough money has been saved, bring your child to the store and have them help you pick out items to donate. When dropping off the donations have your child come with you so that they can directly see the impact they are able to make in other lives through their giving.
Familiarizing your child with these concepts at an early age encourages good money habits that can benefit them for years to come. If you have questions about your own financial planning, contact our team of professionals today!