Teaching kids about money can feel like an uphill battle. It’s not like most kids are interested in hearing about 401Ks and Roth IRAs. So how can you make it enjoyable for them? Here are six fun ways to teach your kids about finances.
Start With the Basics
It sounds wild to start with teaching your kids what money actually is. But truthfully, they probably don’t understand how it works at all. Many kids think it just appears out of nowhere, which isn’t a great precedent to set if you want them to grow up with financial literacy.
Use everyday examples to illustrate the concept. For instance, when you go grocery shopping, explain how you’re exchanging money for food. There are likely many instances like this where you can slip in quick conversations about how money works, so find your window of opportunity and seize it!
Give Them an Allowance
The concept of an allowance is still highly contentious. So if you’re not fond of the idea, we get it. But if you’re open to giving your kids an allowance, give it to them while teaching them to budget. This is their chance to experience the thrill of earning money and the agony of watching it disappear when they spend it on ice cream when they want to save for a new video game.
Encourage them to split their allowance between different funds. This could be jars or envelopes, but involve them in deciding how much they want of their money to go to certain places. It’s an excellent time to talk about percentages, too, without being overly reliant on too much math, which is honestly great for everyone.
Turn Saving Money Into Something Fun
Saving money as an adult isn’t anything special, but we’re used to the idea of having something be overly dull but still important. Kids aren’t nearly as receptive, so it’s good to make savings fun. This could be by using a visual savings tracker or by setting a challenge where they can earn rewards for achieving milestones.
However you choose to approach it, understanding that you’re still talking to kids who want to feel engaged with rather than talked at, you should view it as something exciting. It could even get you having fun with saving, too!
Teach Them About Need vs. Want
When it comes to money, understanding the difference between needs and wants is crucial. Create a list of items and have your kids categorize them. For example, food, shelter, and clothing are needs, while video games and candy are wants. This exercise will help them learn to prioritize their spending and make smarter choices in the future.
Understanding this early will at least make it easier for them to understand the general concept, even if it doesn’t cause them to become financially literate. It’s still an important thing to learn as early as you can so you live a better life!
Lead by Example
Finally, the most effective way to teach kids about money is to lead by example. Kids are like little sponges, soaking up everything they see and hear. If they observe you making smart financial decisions, they’re more likely to adopt those habits themselves.
Practice good money management in front of them. Show them how you budget, save, and make financial choices. Share your financial goals with them and celebrate milestones together. If they see you excited about saving for a family vacation or paying off debt, they’ll understand that managing money can be rewarding and fun.
