You might be wondering, “When is the right time to begin teaching kids about money?” and the answer may surprise you. As soon as your child starts to speak, you can start introducing basic financial concepts! Some of my fondest childhood memories are of the times that my dad would teach me about personal finance.
I remember having money conversations with my father as early as the age of five. My parents owned an ice cream store when I was growing up and I would help my dad count the register every single night. This knowledge really sparked my interest at a young age and helped me set the foundation for a strong financial future.
The key to teaching kids about money is to bring it down to their level, keep the lesson short and sweet, and introduce a level of fun. In this post, I will share the many ways that my dad sparked my love of personal finance as a kid!
Make teaching kids about money a part of your routine
My dad would sprinkle money moments throughout our day. By providing information in small pieces, he was better able to teach me fundamentals without losing my attention. More importantly, the money lessons would apply to whatever we were doing!
The more relevant you can make the lessons to your child’s interests, the more likely they are to listen to you. You can even revisit the same lessons and add on more information as time goes on. Trust me, your kid will come to cherish these learning moments because they will know you are sharing a bit of your adult world with them.
How to make a visit to the bank fun for kids
Ah, visiting the bank. A dreaded adult task that is often put off until the last possible minute. This very mundane part of your day can be an exciting learning moment for your kid. Visiting the bank is the easiest way to start teaching kids about money because it is such a new experience for them.
You can teach your kids how to write a check, fill out a deposit slip, and go over budgeting basics. In addition to these quick lessons, opening a custodial bank account is an excellent way to start introducing saving concepts. This makes the moment more relevant because you are showing them how to take care of their money, instead of making them help you with yours!
A custodial account is set up by an adult for a minor and is more flexible than a typical bank account (ie. no minimums, fees, income requirements, etc.). This is also a fun opportunity to introduce your young prodigy to a banker, who can help further reinforce your teachings around saving. Kids love talking to other adults and showing them that they are mature, so utilize that excitement!
My dad would help me save 90% of the money I received from holidays by taking me to deposit the money at the bank. Afterward, we would take the remaining 10% or so to the bookstore across the street so I could find a book or two. This creates a positive mental association with savings so that your kids will see it as an opportunity and privilege rather than a punishment.
How to start teaching kids about money by using a candy bar
Picture this, you are at the checkout line of a grocery store with your kid. You know the dreaded moment is coming where they will see a Snickers and immediately start begging you to buy them a treat. This conversation will end one of two ways, with you buying them a sugary treat or having the headache of telling them no.
But wait! This is actually a perfect learning moment! One of the earliest lessons I can remember my dad teaching me was how businesses make a profit by purchasing goods at a lower price and then selling them at a mark-up. Here are a few questions to get the wheels turning:
- How much does this Snickers cost?
- How does the store make money off of it if you are paying and it costs them $1?
- So how do you think the store is making money?
- Where did the store get the Snickers?
- How much do you think they paid for it?
- So how much are the Snickers actually worth?
Your kid will be excited to engage with you because let’s be honest, they are hoping for a candy bar. More importantly, you are going beyond money lessons. Now you are teaching them critical thinking skills that will help them see more than the surface-level transactions that are taking place.
You can end the lesson with a treat, or better yet take a moment to offer delayed gratification by promising two candy bars on the next visit. My dad even went the extra mile and taught me the difference between wholesale vs retail prices by taking me to the local restaurant supply store.
He had me calculate how much each candy bar would cost if we bought it in bulk versus the price we saw at the store. Then we made the adult decision that buying the box made way more sense in the long run! Teaching kids about money can then become more of a secret game that the two of you can play at any store by trying to use the clues around you to understand the business model.
Teaching kids about money by starting a business
It is never too early to start a business. Technically, I started my first business when I was around 10 years old! My dad convinced me to buy a gumball machine to place in our family’s ice cream store.
This is an opportunity to think about how businesses work, how you can use that information to your advantage, and how to leverage your money wisely. There are so many different businesses that kids can create. Mowing lawns, walking pets, babysitting, etc., all of these are legitimate jobs that kids typically do growing up.
Go the extra mile and have them create a website via google sites (cheap and easy!), make business cards, and put up business fliers! All of these activities are real world introductions to basic business principles and can be done in just one weekend. For this post, I will share more information on how I was able to start my gumball business to show what kind of money your kid’s might be able to make.
Starting a Gumball Machine Business!
Starting a kid’s gumball machine business is fun because you learn many business principles without having to be physically present! Gumball machines are really easy to get started on and require little maintenance beyond collecting quarters once a month and refilling the gumballs.
This was by far my favorite lesson because I got to enjoy a few gumballs and most of the “work” was counting the quarters I had earned! Here are the easy steps you can take:
- Research- Decide where you may be able to put a machine that will have the best visibility for potential customers, look at the various types of gumball machines, and explore profit margins
- Purchase a gumball machine- You can often find gumball machines locally, but can also easily find an online supplier. The initial cost of a machine is usually between $50 to $200 and many come with a free bag of gumballs!
- Profit- After you place your machine, that is really all there is to it! Wait about a month to see how much money you’ve made and to refill the machine. As long as you’ve placed it in a location where lots of people visit, chances are your machine has paid for itself already! My machine was able to make around $200+ a month.
The psychology behind teaching kids about money
Part of why you must start teaching kids about money is because they could come into wealth much faster than you expect. With so many young adults making money off of platforms like YouTube, TikTok, and streaming online games, becoming a millionaire at a young age is even more likely than winning the lotto!
From my gumball machine, pet sitting, holiday money, tips from the family business, and other odd jobs, I had earned over $10,000 before I had graduated from high school. With information being at our fingertips through cell phones and computers, I wouldn’t be surprised if your kids are able to earn much more than that.
Remember, your goal isn’t to teach your kids everything in one day. Instead, try focusing on sparking enough curiosity that they start to ask you questions. They may not understand the concept the first time around and that’s okay. As you continue to have these conversations all of the pieces will start to fit together like a puzzle!
Do you have more ideas for how you can start talking to kids about money? Share them in the comments section below!
Kathryn Rucker is a business consultant and personal finance blogger who is passionate about helping individuals and businesses scale by improving their online presence. Kat started traveling the world in 2019 and currently runs her blog and business out of Phnom Penh, Cambodia.