Raising a financially responsible child is golden on so many levels. In addition to that obvious practical application of understanding how to use, save and invest money, consider the benefits of debt avoidance, personal responsibility, and added confidence. It is a beautiful thing to help your child that way!
As in all other aspects of parenting, the rule of thumb if you want to teach your children anything is to model the behavior you want them to learn! Here are some tips for helping children make wise financial decisions.
Encourage a young entrepreneur
There’s a reason why lemonade stands have been a popular summer activity for kids generation after generation. Whether your child wants to sell lemonade or high fives, encourage them.
This will train their young minds about supply and demand and work ethic, and send them home with surging pride (or a bruised ego that can be nursed back to health and learned from). Then, as early as possible, encourage employment. A summer gig is a great place to start. Nothing beats real-life experience.
Play games
Simple math games, like those in the app series by Duck Duck Moose, free on Android, iOS, help younger kids get comfortable with numbers. Biz Kid$, the educational initiative associated with the TV series, offers several interactive games on its site; Bringing Home the Bacon helps kids identify wants and needs. Or let them play with a calculator. Have them add up the price of everything they want in a catalogue or at the grocery store. Seeing the total will help them realize how much they need to save for big items.
Involve kids in your smart shopping decisions
Children do learn beliefs about money from their environment and are influenced by even small decisions that parents make. If you show your children that you are looking for sales and waiting to make purchases until prices are reduced, it shows them that you are making thoughtful decisions, and also recognizing price and value.
It is important to show children they do not get everything they ask for and that items have value. When they don’t understand the value of what they receive, it creates very bad financial traits that lead to teenage years and adult years
Teach the value of $1
Even little children can grasp the idea that they have a set allowable amount to spend, and that various items cost set amounts. This can be the first introduction to budgeting. Provide your children with a few dollars to spend on an item (or items) of their choosing.
They will quickly see if what they want to purchase requires more money (i.e., they will need to save) or if they can afford what they want now. Empowering children can play a large role in getting their buy-in for this “game.”