Experts differ on what they believe to be minimum age parents should start teaching kids about money. While some favor pre-school as a the minimum age for teaching money management, others suggest that parents may start instilling money management for children as soon as they are old enough not to eat the money.
Whatever your point of view is, you may find that setting goals according to child’s age helps in teaching money management for kids.
Setting goals will help you and your kids measure their progress. Watch your kid’s actions and ask them question to determine their knowledge and progress. Once your kids have mastered their goals – adjust them accordingly or go to the next set of goals.
Here are some suggestions for goals by age you may want to consider:
- Give your children a piggybank. Occasionally give them some money and teach them the value of saving money.
- Teach your children to count money, coins & bills. As a bonus their mathematical abilities will improve.
- Use the notes and coins as en encyclopedia. Teach your children about countries, names and places that appear on the face of these coins and notes.
- Teach your children the values of self discipline and delaying gratifications. Once there is enough money saved, take them to the store. Enhance your child’s sense of independence by letting him/her choose their own gift, but insist on exciding the saved amount! Do not add money of your own.
- Start giving your child an allowance. Make it a fixed amount on a regular basis.
- Give the allowance on a regular basis and don’t wait for your child to ask for it. Stop giving your child money for doing chores around the home or for receiving good grades.
- Don’t use your child’s savings as a loan. Do not take money from it as a loan (and than forget to return it). On the other hand, if you lend your child money – insist on him/her paying it back in full, and on time.
- Money doesn’t buy friends. Make sure your child isn’t trying to buy friends with his/her money. On the other hand – teach them to be open-hearted and don’t turn him/her into a cheap.
- If your child runs out of money, don’t give him/her more. Teach them about the limits of budgets and budget planning. Don’t give your child a cash advance on next month’s allowance either. It will make him/her a credit user at young age.
- Teach your child the value of smart consumerism and price comparison. Maybe the store next door sells the same toy for less.
- Money management games are an invaluable tool when it comes to teaching kids about money. Your kids learn about money and money management while having a great time.
- Your child doesn’t need everything his friends have.
- You either don’t buy everything your friends have. Teach your child the fact of life: Everyone has different budget limitations, and the neighbor’s money will always look greener.
- Your child is becoming independent. He/she needs money for entertainment. Put them on a fixed budget. Agree with him/her on their allowance and teach them how to keep a budget and remain within its limits.
- Consumerism is fueled by advertising. Teach your kids the difference between information-based smart consumerism (e.g. price comparison) to advertising driven consumerism (e.g. ads that turn to your feelings, fears & dreams).
- Brands doesn’t buy friends
- Encourage your child to get a part time job & earn money.
- Your child should open a bank account. This is a good opportunity to teach them proper money management – teach your child how to keep track of their account, talk to them about interest rates, fees etc.
- Encourage your child to learn about saving & investments. Talk to then about saving programs, short term investments, bonds, stock & ETFs. Explain the risks involved in each of them. Share with them your thoughts & doubts (E.G. why and how much money you need to keep liquid. For how long can you put money in a saving plan etc.)
- Teach your child to how to control their credit card, the price of credit and especially the risks involved. Teach your child about cash flow – credit that had been used but hasn’t been accounted for yet. Teach them to be carful with their credit information and who they give it to.