You’re never too young or too old to learn about money and become financially savvy. As soon as your child knows how to count and understands the principles of numbers, you can start teaching them about money and brush up on your skills along the way by following these simple how-tos.
Just as you would teach your child colors, shapes, letters, and numbers, demonstrate how to identify different coins and dollars and the values of each. Let your child count your spare change to practice.
The next time your child wants a treat at the store, ask what the price is. Agree to let your child buy the item when he or she has saved the amount. Then, give your child a piggy bank or container to encourage them to reach their goal. Not only will your child learn how to save, but they may also learn how to avoid impulse purchases and the importance of delayed gratification.
Giving your child an allowance teaches accountability and money management. Allow your child to make all the spending decisions, even unwise ones.
By using a hands-off approach, your child will learn the difference between wants and needs. For example, your child’s allowance may include the cost for a daily or weekly necessity, such as an afterschool activity. This gives your child some pride in ownership and the responsibility of paying for themselves. At the same time, if your child spends his or her allowance foolishly instead of paying for necessities first, he or she learns the importance of budgeting.
Perhaps the best way to teach your child the value of a dollar is leading by example. When your child sees you use a credit card, explain how credit works and how the balance is paid off. Have your child help you balance your checkbook each month. Avoid displaying bad spending habits, such as overspending, skipping payments, or not making minimum payments. Show your child how you allocate your paycheck to pay expenses and save for small luxuries.
Finally, teach your child generosity. Donate to a charity or an organization so your child understands the true significance of wealth.