Here’s a fun—and surprising—finance fact: Research shows that kids as young as three years old can grasp basic financial concepts. Talk about a great opportunity for parents to share wisdom that can last a lifetime! Teaching children about money management early on will help them get started on a path to financial well-being as they grow.
At Sqwire, we know family financial literacy begins with adults who are financially literate. Our platform is designed to provide the basics of financial education with the goal of supporting individuals through life’s many financial phases and challenges. We make learning engaging and accessible for parents and future parents!
Why Start Early?
As parents, you play a pivotal role in shaping your children’s attitudes and habits towards money. Understanding personal-finance concepts such as saving, budgeting, investing, and careful spending can help children avoid common pitfalls, like debt, and empowers them to plan for future goals, like higher education or homeownership. Prioritizing financial education from a young age contributes to a generation equipped with problem-solving skills and prepared to contribute positively to society.
Where to Begin?
The easiest place to start is with the concept of money itself. Explain what money is, how it’s earned, and its various forms, from coins and bills to digital currency. Use real-life examples, like paying for groceries, to make these concepts tangible.
Keep in mind an age-appropriate approach. For young children (ages 3-5), focus on basic concepts like identifying coins and understanding that money is used to buy things. As children reach elementary school age (6-10), introduce more complex ideas, such as earning money through chores, saving for goals, and differentiating between needs and wants. For pre-teens and teenagers (11-18), delve into budgeting, managing allowances, understanding bank accounts, and the basics of credit and debt. Incorporating practical activities, such as setting up a savings jar for younger kids or a simple budget for teens, reinforces these lessons and builds a strong foundation for future financial literacy. Tailoring the education to their cognitive abilities and interests ensures that children remain engaged and retain knowledge.
Tips for Teaching Kids About Money
Lead by Example: Demonstrating responsible money habits yourself, such as budgeting, saving, and avoiding unnecessary debt, sets a powerful example.
Make It Practical: Use everyday situations to teach financial lessons. For instance, involve children in grocery shopping and explain concepts like budgeting and making choices based on needs versus wants.
Make It Age Appropriate: For younger kids, use jars labeled with categories. For older children, consider using a simple spreadsheet or a budgeting app designed for kids.
Use Allowance Wisely: Giving children an allowance is a great teaching tool. Talk to them about the balance between spending and saving. This is also an opportunity to encourage them to share through charitable donations.
Open a Savings Account: Taking your child to the bank so they can see how transactions work and how to get serious about savings.
Teach Delayed Gratification: This is one of the hardest but most important lessons. When children understand the value of waiting and saving for something they want, they learn patience and goal-setting skills.
Discuss Financial Decisions: Involve children in family financial discussions (age-appropriate) to help them understand how financial decisions are made, such as planning for vacations or major purchases.
Use Resources and Tools: From apps to books to hands-on activities, there are many age-appropriate resources designed to teach kids about money management. Learning works better when it’s fun and engaging.
Bank on This
By instilling positive money management habits early on, you empower your children to make wise decisions that will stick with them as they grow and begin their own financial journey. In that spirit: Start early, lead by example, and make learning about money fun. You’ll set your kids on a path to enjoy a greater quality of life!
Sqwire is on a mission to help people take control of their financial future. We partner with businesses, organizations, and solopreneurs to provide our SqwireLife platform to employees and customers. Let’s talk about how you can provide them with FREE access to 70+ lessons on personal finance topics, from insurance to investing to retirement and more!
Photo by Emma Bauso: https://www.pexels.com/photo/family-of-four-walking-at-the-street-2253879/