Financial literary is neglected in many schools. In the U.S., less than half of states have financial literacy requirements for their K-12 education systems and just 4 require high school students to take personal finance classes, according to Investopedia.
That largely leaves money talk to parents. But many parents are reluctant to start that conversation. After all, it doesn’t seem like an easy subject for kids to understand or get excited about. Plus, parents already have plenty on their plates, like managing their own money and teaching their kids the big life lessons – you know, treat others how you want to be treated, don’t eat candy that you find on the ground, and that biting other people isn’t cool.
But your kids will be spending, earning, and saving money for their entire lives. Why not teach them the basics early on? Here are 5 tips to help you help them.
1. Teach lessons that are appropriate for your child’s age
You can and should start early, but tailor the lessons to your child’s age.
Preschoolers and toddlers, for example, can sort coins, learn about how much each is worth, and begin counting money. Then, around kindergarten, peer pressure typically starts kicking in, and your child will probably start asking for things that her friends have. This is a great time to talk about needs vs. wants and resisting peer influence when it comes to money. It’s also a good time to consider giving your child an allowance, according to many experts. (More on allowance below.)
2. Take advantage of teachable moments
There are teachable moments about money every day – namely, whenever you spend money. Take advantage of them. For instance:
- If you’re shopping for groceries or clothes, talk to your children about your thought process for deciding what to buy. How do you evaluate quality and price? What are easy ways to save money?
- Before you make a large purchase (e.g., a home, a car), actively involve your kids in the decision-making process. Of course, that doesn’t mean letting them make the final call. But you can discuss your options with them and ask for help with small tasks, like research. It will help them learn the process and understand that big purchases require careful thought.
- When your kids receive money for their birthday or the holidays, talk to them about what they’re going to do with it. Buy junk food now? Or start saving for that sweet new bike? Just remember, you’re trying to help them think about their options, not making the decision for them.
- If you buy something with a credit card, explain how credit works and the difference between credit and debit.
3. Try to walk the walk
Talking to your kids about money is great. But your actions will often speak louder than your words.
If you talk a big game about budgeting and careful spending but you make impulse buys on the regular, your kids will take note, consciously or otherwise. Like it or not, your behavior relating to money will impact your kids as adults. So, think of the children (no pressure) and try to practice what you preach.
4. Consider giving an allowance
Some people debate the merits of providing an allowance to children. But we think it’s a great opportunity for your kids to learn firsthand how to earn, manage, and spend money. But be sure to resist the urge to micromanage your child’s money choices. Allowances are a great chance for kids to make mistakes and learn from them at an early age, without serious repercussions.
5. Try to make it fun
Last but not least, money talk with your children shouldn’t just be a list of DO NOTs. It should be engaging and maybe even fun.
That could mean asking Elmo for help, giving your kids piggy banks, or playing a finance-related board game. Don’t be afraid to get creative. If you can gain your kids’ interest early, you’ll help them gain interest later. #PunIntended