The answer is simple – now! Financial Literacy is one of the most important subjects for your kids to learn. Kids are never too young to start learning money lessons. The more opportunities they have to work with money and manage it, the more financial savvy they will be as adults. “ A report by researchers at the University of Cambridge commissioned by the United Kingdom’s Money Advice Service revealed that kids’ money habits are formed by age 7.”¹
Today, smart phones allow our kids the capability of piling up in-app purchases with the swipe of a finger. You may have unwittingly bought thousands of dollars in “gems” or “smurfberries.” I have seen first hand as friends give their older kids access to their credit cards to shop online and the consequences can be dire once the parents view their statements at month end. Today’s teenagers don’t think twice when tapping their credit card to purchase something – they give no thought to how those purchases are going to get paid. Kids need to start at a young age to be taught the value of money!
Raising kids to understand the value of money and the importance of saving money can be daunting but it is important that as parents you teach these skills to your children at a young age so they will grow up to have a strong handle on their own finances. You can start teaching your kids the value of money as young as 3 years old – YES as young as 3 years old!
Here are some ways to teach your kids the value of money:
Take Them to the Bank – Perhaps this won’t sound quite as exciting as the fire station to little kids, but banks can be fun and welcoming to kids! Often banks will have free gifts for kids like piggy banks and it feels really grown up to get your very own bank account like mom and dad. Keep the bank book safe, but take the kids with you when you go to make a deposit in their account. Let them give over the cash and the book and keep track of the numbers in the book with them. Watching their money grow will teach them about saving.
Play Games with Money – They will start doing math involving money around grade 1 so this is a perfect chance to practice at home with the real thing. Let them sort coins and bills. Set up a play store and make purchases that require them to think about what things cost and what change they need to give. There are also the old standbys of Monopoly and PayDay you can take out for games’ night.
Give Them an Allowance for Spending Money – Whether they have to do chores or not to earn it, a small allowance will help to teach children the value of money. They have to be responsible for keeping it safe – if they lose it, it’s gone. This money will also come in really handy at the store when you are hit with that barrage of “Can I get? Can I have? Can we buy?” questions. You simply have to say, anything you want to buy today, comes from your allowance money. It’s amazing how quickly they will learn to decide when to spend and when to save up for something more special when you aren’t buying for them. They will have to consider cost, value and the fact that they can deplete their fund by buying now or save it to buy something later.
Show Them Your Bills – It would be nice if they could pay them too but getting them involved in what it takes to run a home is a good way to teach them the value of money. They might even start turning the lights off when they leave the room and turning off the tap while brushing their teeth! Let them help figure out the math – what did we spend on electricity this month, vs. last month? What can we do to save energy? Let’s see if we can spend less on this next month.
Get Working! Older kids can get entrepreneurial and mow lawns or rake leaves to earn some extra money. They will appreciate every dollar they earn when they’ve had to work hard for it.
Most of all, have fun with it and in the meantime, remember to disable the in-app purchases on your phone!
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¹Quote taken from “The 5 Most Important Money Lessons To Teach Your Kids” Laura Shin, Forbes Magazine Oct. 2013