Teaching your kids about money in the initial stages of life is better as it can help them understand how to manage themselves financially. The more aware they are about the importance of money, the more they will value it and take their monetary decisions sensibly, whether it’s purchasing a toy they want or saving for college. But it’s a tough concept to explain to that little mind.
So many Americans are facing financial stress already, passing the idea on to a little one can be a daunting task. But, it’s never to start teaching them the basics of money management early. Here are some tips for talking to your children about money from toddler to teens.
Age 3 – 4: Introduce the Idea Of Money And Buying Goods
The ideal time to teach your kids about money is the age when they start to count. Start by having them count the money and set the coins. Teach them to identify each penny, even if they don’t remember how much each is worth. You can also set a fake store at your kitchen counter where the kids can exchange money for goods, introducing them to the basics of shopping.
Ages 6 – 8: Tell Your Kid About Bank and Savings Account
AS soon as your child is old enough to receive a monthly allowance, he will need to put his money somewhere. In this scenario, you should make a trip to the bank with your child. Help your kid open a savings account and encourage them to make weekly deposits. As the balance increases, you can discuss with them the concept of interest and how the bank pays people to save their money with them. Many banks have children’s saving accounts that offer no-minimum balance and no-fee; this is also an ideal age to take up coin collection as a hobby.
Ages 9 – 10: Introduce Spending, Saving, And Overdue Gratification
At this age, you can teach your kids about what they can do with their allowance. Instead of just setting it aside for savings, you can explain to your child the concept of divide and rule. You can tell your kid they can divide their money into the following categories:
Once they are in that age where they interact with publicly traded businesses and brands that they like, take them to McDonald’s or Disneyland, ask them what they think about that company? It’s the best time to introduce them the concept of investing and building wealth instead of always staying in work for money and pay your bills cycle.
You must add your kids when you are having family budget discussions. It may seem like a bad idea to some parents to teach kids concepts like mortgages and debts but adding kids into these decisions for family outings or holidays shows them how they can leverage money for buying things they want.
One of the best ways to teach your kids comparison shopping is to read the store’s price labels with your child, look at the price and size, and compare the bulk amount. Keep in mind to take a look at the quality you are buying. For example, one week buy paper towels from a renowned brand, the other week go for a random brand, then discuss with your kid the differences and then decide together whether buying from the brand was worth it or not.
Ages 13 – 16: Teach Your Kid About Stock Market And Investing
When your little one is no longer a little one and has hit their teenage, its time you teach him about the stock market. You can imagine investing in brands your child is familiar with like Mattel or Disney. Start with a family activity where each family member picks up a stock, then read the paper, or you can watch financial news together and discuss the stock values of everyone oscillating.
Between school supplies, lunch money, and other needed things, allowance can easily end for teens. You need to help you kid initially by discussing the difference between needs and wants. For example, the potato and gravy game, potato are food, and they are important for survival, gravy, on the other hand, is just a necessity as it makes the potatoes taste better. You can clear this concept to your kid by discussing what is important for your family and what is not.