Teaching kids sooner rather than later about money and debt can pay off substantially. Using credit responsibly and living within your means are valuable financial habits that cannot be taught quickly.
Rather, a well-rounded financial education occurs over time with age-appropriate lessons, many of which are conveniently disguised as fun.
Use these techniques to help your kids grow into financially savvy young adults.
Lela Davidson is a former CPA and the author of Blacklisted from the PTA, a collection of irreverent essays about motherhood and the modern family.
Teaching kids sooner rather than later about money and debt can pay off substantially. Using credit responsibly and living within your means are valuable financial habits that cannot be taught quickly.
Rather, a well-rounded financial education occurs over time with age-appropriate lessons, many of which are conveniently disguised as fun.
Use these techniques to help your kids grow into financially savvy young adults.
- Just say no: Refuse to buy things for young
children when they are at the store with you. No trinket is more
valuable than the real gift you give your child by denying instant
gratification. If you give in, your child-who is too young to
understand money-simply will learn that when they want something,
they get it. - Create a currency: Start your own economy.
Kids love to earn gold stars, bottle caps or other “currency” that
can be exchanged for the things they want. The more tactile the
better. Start with stickers on a chart and work your way up to
physical objects the child can hold and manipulate. Added bonus:
math skills! - Make believe with money: Little kids love to
play pretend. Provide toys that encourage fiscal play, like toy
cash registers, scanners, and ATM machines. Let them empty the
pantry to set up a store or encourage them to hold a bake sale with
Play-Doh pies.
- Put them to work: Transition from play money
to real cash. School-age children are old enough to start saving
for that iPod or buying their own candy at the store. Whether in
exchange for specific chores or as an allowance, allow your
children to earn their own money. It’s a powerful first step toward
eventual independence. - Hello, Monopoly!: Give kids games that teach
financial concepts and play with them. (Try playing for a set time
instead of to the game’s legendary bitter end.) In addition to the
classic real estate trading game, there are others that teach
realistic money skills. Check out Rich Dad Cashflow for Kids, a
comprehensive fiscal education system created by Rich Dad, Poor Dad
author Robert Kiyosaki. - Make a deposit: Kids this age are old enough
to have a bank account. Make a point of reviewing the bank
statement with them each month, paying special attention to the
concept of interest. Encourage kids to make regular deposits,
keeping some of their cash for spending and donating, while saving
the rest.
Grade School
- Paying their way: By the tween years, kids
should start to be responsible for some of their own expenses. It’s
one thing to earn money and another to live under the constraints
of that finite resource. Consider making them pay for some of their
own expenses, such as school supplies or birthday gifts for
friends. - Nurture budding tycoons: You can spot the
entrepreneurial kids by this age. For kids who show an interest in
business, consider an online stock or small business simulator game
offered by many websites, including Investopedia. - Cultivate the value of giving: This is a great
time to teach kids the importance of using money for community
good. Business skills can be sharpened and philanthropic traits
nurtured by encouraging kids to help causes they care about. Animal
shelters are popular.
Close up view of a gift with a ribbon
- Get a real job: Depending on school workload,
this is the time to get a job, take on responsibilities in the
family business, or even start a venture of their own. Just make
sure you know where that paycheck is going. - Swipe it!: Make sure kids learn how to use
credit before they leave home. Start with prepaid debit cards, and
then transition to low-limit credit cards. The key is living within
their means, so teach them to pay the bill in full at the end of
the month. - Collect for insurance: If your child drives,
consider requiring him to pay for the insurance. The clear
connection between the cost and the privilege will make an
impression.
Teenager
High School
