How to Teach Kids About Money - What Mommy Does (2024)

FAQs

How do parents teach kids about money? ›

Parents can kick start their teaching by talking to their kids about making a plan or setting a goal to buy something. They can then create a mini budget and show their children how money can be saved for other things down the road. And as kids grow older, parents can begin to teach them about credit.

HELP KIDS UNDERSTAND THAT MONEY HAS A VALUE.

It sounds simple, but when your child asks for a dollar to use at the vending machine, gently explain that this dollar is in exchange for something else. Encourage your child to carefully consider their options as a result.

He recommends teaching five- to eight-year-olds “very, very basic things” like that money has value and how choices made with it have an impact. For eight to 12-year-olds topics can be more complex, Landolt believes. “You can talk about the different types or uses of money.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

Use allowances to teach children how to handle wealth. Have them divide their allowance into three equal parts. One-third goes toward their own pleasure, one-third into savings and one-third to charity. This method helps them learn about other uses of money, beyond buying them things.

The key is to be calm, firm, and direct. Your number one goal has to be to create a plan that works well for everyone and gets your parents headed toward a better future. It would be best if you establish some conditions, such as financial transparency, to ensure you don't end up enabling their bad decisions.

Filial Responsibility

Filial support laws obligate adult children to provide necessities like food, clothing, housing, and medical attention for their parents who can't afford to take care of themselves.

Keep It Simple and Relatable

For all kids, especially young ones, it's important to make conversations about money and class relatable. That can help their understanding of why some people do well financially while others struggle. This was one of the reasons I rewrote the classic Little Engine that Could story.

What is money in simple words for kids? ›

Money is a mode of payment accepted by both sellers and buyers for goods and services. Money is what we give in return when we buy stuff like food, clothes, house, groceries, etc. We give money in return for purchasing anything. This is a simple trade or exchange.

Most evidence shows that cash rewards might work in the short term, but the benefits don't last. The main concern is that the external reward does not build internal motivation, which is critical to sustaining effort and a lasting good outcome.

Talk to them about something they really want but that their pocket money won't stretch to. Help them work out how long it will take them to afford it if they save all, half or a quarter of their pocket money each week. Help them decide their best savings option, then make a progress chart to keep them motivated.

Going to the Bank

Children can earn play money for chores or activities, open savings accounts, write checks, use debit cards, and take turns with different job roles such as customer, teller, and security guard. A field trip to the local bank can spark interest, questions, and ideas for play.

Create a chart that has 100 squares, labeling each square in sequence with the numbers one through 100. Give your child a handful of different coins and tell them to place each one on the square representing the total value, having them begin with the highest-value coin and working their way down.

Financial literacy already in classrooms

Financial literacy is also included in first, second and ninth grade curriculum. First graders, for example, learn that money can be exchanged for goods and services, and people make decisions about how to spend their money.