Want your kids to grow up to be responsible with money? Then start young! Whether your child is 5 or 15, use these tips to teach them about spending and saving.
Staying on track with your financial goals and developing better money habits doesn’t have to be a behind-the-scenes job. In fact, being open and teaching kids about money can help them develop healthy habits from an early age that later translate into smart financial decisions in adulthood. Learn how to get them involved with the family budget in these age-appropriate ways.
Ages 5–10: Get Them Thinking
It’s never too early to start teaching children about money. Rather, the earlier, the better. For example, if you like to coupon, you can get your younger children to help you cut out coupons each week. When they start to understand how the process works, you can make a game out of who can find the lowest price on an item. Getting them in the habit of saving money by waiting to purchase items at a discount also helps them practice patience.
If they’re especially excited about the prospect of cutting back on expenses, let them brainstorm ways that they could save money on everyday expenses. Are there activities or monthly expenses that you can cut back on as a family, such as eating out at restaurants? Do they know the importance of saving on utility costs by doing simple acts like turning off the lights when they leave the room? Turning off the water while they brush their teeth?
Ages 11–15: Give Them Some Responsibility
As they become preteens, you can begin to stress the importance of saving up your hard-earned money. At this age, they may be receiving compensation for doing chores around the house or tasks around the neighborhood, such as walking dogs or raking leaves. And, of course, there’s likely an abundance of items at the store that they would love to purchase with that money. Stress that they must save their money to be able to afford those nice things. Consider letting them open their own accounts at the bank for this purpose.
This is also the prime time to discuss how debt works. You can use items that they are currently interested in to show how much the items would actually end up costing if they borrowed the money, with interest, to purchase them. When the money is officially saved up and it’s time to make the purchases, they’ll be that much more appreciative of the items. Likewise, you can discuss the opposite of paying interest on debt: the process of earning interest on money that’s put into savings.
Ages 16 and Beyond: Show Them the Importance of Preparation
At this age, your children are hopefully well versed in the art of saving money, both with discounted prices and saved-up money that was earned. Now it’s time to show them what it’s like to be accountable for spending certain amounts of money on a regular basis — that is, how to pay bills responsibly. In addition, introduce them to the concept of paying now to save later. Examples of this include paying for insurance, as well as a home warranty. Consider putting a new expense in their name, so they can practice allotting money each month to go toward the bill.
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