Easy Ways Kids Can Learn to Master Money

Kids sometimes think that only adults need to know about money, but the earlier that we can instill the importance of money in them, the better. Building a basic understanding of the fundamentals of finance as a kid will help lead to a successful financial future as an adult. Here are easy ways to help kids learn about money management:

Teach Value

Understanding the value of money is a key principle in money management. Money doesn’t grow on trees, and we must earn our money in order to obtain necessities as well as wants. Assigning chores in exchange for a small payment or reward is a great way to teach kids the value of earning their money. By using real or play money or a point system you can practice adding value to daily home privileges and requests. For example, set a weekly amount such as 100 points a week and create a list of how many points rewards will cost them; like using the internet is 5 points a day, using the computer is 10 points a day, TV time is 15 points, etc. This will help kids realize the value of their money and how to allocate it towards things they want.

Teach Saving

Saving money can teach kids about delayed gratification and the importance of putting aside funds for the things you truly want. An easy way to do this is to start with a piggy bank and set a goal amount they would like to save in order to purchase an item, go to a movie or participate in an upcoming event. Using money charts and weekly check-ins also helps with responsibility and accountability by encouraging discussion and visually showing their progress towards the goal. You can make it fun and into a game or challenge to encourage them to reach their savings goals.

Teach Budgeting

Teach kids smart money-spending habits such as using coupons, looking for sales and allocating set amounts of money for specific things. This gives them an overall better understanding of how money is distributed and spent on necessary items while learning how to budget. Introducing topics like how utilities, rent, bills, car payments and groceries are paid will give a bigger picture on how money is spent in their household. Depending on the age of the child, you can also introduce more mature topics for older kids such as earning income, paying for items such as insurance and how taxes impact your budget. Consider including your children in your budget planning to get them familiar with these concepts. 

Teach Needs vs. Wants

Last but certainly not least, teaching the difference between needs and wants is important. Sit and discuss the difference between necessities such as shelter, food and utilities versus wants, such as a new toy or video game. You can start small with things that are familiar like saving money for a trip with friends versus saving money for school clothes and build up to bigger, long term goals like saving for a bike or a car to get around versus saving for a season pass to an amusement park. Another great way to show needs versus wants is to look at the cost of eating out rather than cooking at home and the savings compared. Come up with fun creative ways to show kids how to make things last, appreciate what they already have and identify what they truly need instead of what they may want.

For more practice, use our kid’s money goals worksheet.

Visit our Financial Knowledge Blog to learn more tips on setting up a solid financial future or join us for Financial Wellness Wednesdays.