5 Methods of Teaching Kids About Money

Teaching kids about money is a crucial life skill that should be taught as early in life as possible. The quicker kids learn that money does not grow on trees, the quicker they begin to grasp the concept of saving money and working hard for what they want. What kids need to learn regarding money goes beyond what they learn in school. They need to be taught about the value of money and why it should be saved. In school they will learn how to add money, how to calculate interest and how to make change. The intrinsic value of the dollar and what it should mean to them needs to come from home though.It is also the job of every parent to discuss credit, its importance and even talk about checking credit to ensure its accuracy.

Teach the Difference Between Needs and Wants

Kids need to understand the difference between needs and wants early in life. While this can be a difficult topic for them to grasp, it is essential to continue teaching it as often as possible. For young kids, parents can use simple examples, such as a cookie or a small toy. Parents can explain to children that are begging for either item that while they might really enjoy having the cookie or a new toy, it is not something that they actually need. Teaching kids that needs are something that is necessary for survival early in life will hopefully help to prevent them from becoming excessive spenders as they get older.

Talk About Budgets

Even young children can learn the basics about a budget. The younger that parents begin to teach kids about keeping finances organized the more natural it will be for them in the future. Talk to kids now not only about the importance of saving a portion of the money that they earn or thatthey receive for gifts, but also about paying bills, buying necessities at the store, giving to charity as well as saving. Kids need to see just how far a dollar can go and how adults divvy up that money on a daily basis in order to make ends meet. This important lesson can also help kids get the full picture when it comes to money, not just that they have money in their hand and need to go spend it at the store.

Savings not Just in a Bank Account

Children will typically mimic the habits that they were taught when they were growing up. Those kids that grew up withparents that used coupons, comparison shopped and truly thoughtabout every purchase before spending money are more likely to have budget conscious children. It is never too early to teach kids about what coupons mean and how they work. This could be a very valuable lesson in kids’ money management. Giving kids a hands-on lesson with coupons could help to get the point across even further. When a coupon is used, parents can give the child the amount of money that was saved with the coupon. This can help them to get a visual of what exactly was saved. After doing this a few times, they can physically see their savings add up, helping to drive home the importance of saving money in every way possible.

Give an Allowance

One of the best ways to teach kids about money is to give them an allowance. This gives them the chance to learn how to earn money as well as how to manage it. Talk to children before giving the allowance and set some parameters so that they know what is expected of them. Their allowance should include room for negotiations as well as the opportunity to teach them about saving, spending and even paying bills.

Set Goals

Another great way to make teaching kids about money easy is to help them set goals. If there is a certain item that they want to buy, help them learn how long it will take to save up for that item. Help them put the money in a savings account and watch the interest grow. When they reach their goal, celebrate with them as it is very rewarding to have the stamina to save for a large item.

Teaching kids about money does not have to be difficult or stressful for parents. The earlier that the lessons start in life, the more likely kids are to grasp onto them. Talking to kids about all aspects of money including working hard for it, saving it, using it to pay bills and purchasingthings at thestore will give kids a full view of what they are to grasp about money, setting them up with a solid foundation for life as an adult.

Joy Mali is an active blogger who is fond of writing articles on Bad Credit Loans to encourage people to manage and protect their credit. Follow her on Twitter to know more on things to teach kids about money management.