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7 Tips for Teaching Kids About Money

Life lessons in financial literacy for kids

As adults, how we handle finances sends a powerful message to children. That’s why it’s important to model the healthy money management behaviors that we want the kids in our lives to adopt. 

If you're looking to learn how to teach kids about money, below you'll find seven tips to help shape your child's attitudes and behaviors about finances.

1. Share the story of money in everyday life

Even for younger children, aged 4 or so, everyday activities like shopping or family outings provide a chance to start teaching kids about money. First, it’s important to demonstrate using different forms of money such as coins, dollar bills, and credit or debit cards. Second, it’s also important to have them consider the things or activities that cost money such as toys, groceries, trips, or admission to the zoo. This will help put into perspective how many daily activities, many of which are necessities, have a cost associated with them. Be sure to also point out things that have value may still be free. For instance, visiting a playground or spending time playing with a friend is fun and doesn’t require money.

2. Point out the ways adults earn money

Discuss how you or other family members or friends earn money. Guide your children to consider that the professionals they meet each day such as teachers, bus drivers, mail carriers, and others, are paid an income. You can also brainstorm with older children about how they can earn their own spending money by doing small jobs like dog walking, yard work, babysitting, and other tasks.

3. Build a beginner’s budget

Children age 8 or so is a great time to work on building a simple budget, allowing them to plan out their spending for a set time or a special event. You can start simple with a written spending plan for the upcoming week. A beginners budget conversation can include measures for older kids to earn an allowance. For teens, work with them to set up an account that has a set monthly amount. With this, they can withdraw money for gas and incidentals. It’s also a great opportunity for them to learn that once money is gone, it’s gone, further stressing the importance of having an income to keep the money cycle flowing.

4. Plan out purchases

For kids of all ages, making a list before going to the store helps reduce impulse decisions. Have your child help list out everything you need before leaving the house. Then when they ask if they can have something else, remind them that it’s not on the list. For older kids, introduce the idea of waiting to buy something they want. For any items on a “wish list,” talk about how much it costs and help them plan for the money required to purchase it.

5. Be a smart shopper

When grocery shopping or making larger purchases, have your child help locate coupons or sales. Bring children along when comparison shopping so they can understand price differences. This can help a child understand the value of money and the intricate details that are considered prior to making a purchase. It’s also important to be a smart online shopper by reading reviews on comparable items.

6. Model good use of credit

The idea of credit can be an intimidating concept to understand, so it’s important to introduce the idea early on. For example, let kids witness you swiping your card at the gas station. Remind them that you’re borrowing money to fill up the tank and you'll have to pay back the purchase (possibly plus interest). When the credit card bill for that purchase arrives, review it with the kids. Highlight the importance of honoring your agreements with the lender by making on-time payments and keeping balances low. For older kids, introduce the topic of a credit score and credit report. Pull up your own history as an example. Teenagers especially should be aware that a positive credit report will help them in the future.

7. Stress the habit of savings

From an early age, stress the importance of setting aside money. This can be from earned income or by setting aside a small portion of a child’s birthday or holiday gift, to be used for emergency or a special future purchase. Our flex savings certificate is the perfect savings vehicle for short-term goals. This tool is a great option to teach children the importance of saving.

There are so many way you can start teaching kids about money. Looking for another approach to keep the learning process going? Zogo is a gamified financial literacy app that rewards you for completing bite-sized financial literacy lessons on intelligently saving, spending, and managing your money.

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