It is so important to teach kids about money. If we don’t teach them to manage their own money while they are at home with us, how will they do it properly as adults? So many adults mismanage their money, and get trapped under a mountain of debt, simply because no one ever talked to them about money when they were kids.
We tend to think that kids shouldn’t have to worry about it. Taking care of the finances is “grown-up stuff.” Well, that’s partially true. They shouldn’t be worried about the family’s financial problems, but chances are, they are aware. They just don’t know what to do about it. If we as parents do not show them now, they will make the same mistakes we did.
So, how do you teach kids about money? What’s a good age to start? Rachel Cruze, the daughter of Dave Ramsey says you can start as young as four years old. Here’s her suggestion for young children (I’d say four to ten years old):
Let kids do chores for money. Sure, there are some chores that they should do because they are a part of the family, but some should be a way to earn a small amount of money. You decide which chores are worth pay, and how much pay. When the chores are completed, the kids should place their money into a clear, plastic jar. It’s important for young kids to physically see their savings grow. When they ask for random things (not at birthday or Christmas time) let them take out some of their money to buy it for themselves. If they have not yet saved enough, help them to figure out how much more money they need and how they can earn it. This helps kids
- learn the value of a dollar
- know that you have to work for money
- develop patience and delayed gratification
What about older kids? This is an idea my mom had when we were teenagers:
We had a list of chores that needed to be done each week. You had to finish your list, or you didn’t get paid. At the end of the week, if all the chores were done, we got $20. We decorated three old coffee cans and labeled them “short-term, long-term, and tax.” We split our money with $3 in “tax,” $10 in “long-term,” and $7 in “short-term.” at the end of the summer, we used our “long-term” cash to buy school clothes. We could use our “short-term” cash for whatever we wanted throughout the summer. We used our “tax” to buy something for the whole family. You could also to a “give” can for charitable giving in addition to, or in place of the “tax.”
Another great way for older kids and teens to learn about money is to let them open a savings account, or if they already have one, let them start contributing to it. When I got my first job at sixteen-years-old, I started saving every other paycheck. I saved like this for a full year and then I had enough for a down-payment for a car. My parents agreed to help me purchase a newer car if I did this. It was so exciting to see the balance in my account grow. It was also really awesome to drive a car I knew I had worked so hard for! I loved and appreciated that car so much more than I would have if my parents had just given it to me.
There are many ways to teach kids about money. I have given you a few examples here, but there are other ways to do this. Check out Oklahoma Money Matters for some other ideas. They have great stuff! If you have a special way you taught your kids about money, or if you feel your parents did an excellent job teaching you about money, tell us your ideas! We would love to hear them!