How to teach kids about money?

Posted by
October 10, 2005
 

There is absolutely no dobut in anyone’s mind that habits develop during early childhood and the older you get the harder they are to change. While it may not seem so obvious to teach kids good “personal finance manners,” these are as important as all other manners. Sam Renick, the author of two financial books for children, has the following tips on how to teach kids about money:

    Improve your own understanding of personal finance and set a good example to follow. Believe it or not, many adults don’t understand the basics of personal finance.
    Communicate, communicate, communicate. Talk to your kids regularly about money. Involve kids in money-related activities (eg. counting, sorting, shopping, banking, bill paying, etc.).
    Start early with books and music. Two activities that can begin from birth are reading to children and exposing them to music. Both activities help cultivate an interest in and an awareness of money.
    Coloring sheets and books. Visit your local bank or credit union and ask them if they have any coloring sheets and coloring books for kids.
    Piggy banks and saving jars. Get your child a piggy bank or, better yet, create your own.
    Board games and cash registers. Monopoly (Junior), Moneywise Kids, Payday, the Allowance Game are good choices. Kids love cash registers and ATM machines.
    Wealth/goal journal and affirmations. Encourage children to keep a journal, including pictures, of goals that are meaningful to them. Create short, fun, repeatable slogans for your kids such as: “saving makes me strong;” “from every dollar, save a dime;” “change adds up;” “money likes to grow and grow;” and “earn, save, invest, share and spend.” Post them around the house!
    Clip coupons.
    Lists and shopping. Lists are great planning, thinking and organizing tools, and shopping is a great way to introduce kids to budgeting. Allow kids to comparison shop for items. Point out the difference in pricing between generic and name brands.
    Recycle.
    Allowance. There’s no substitute for experience. Give kids an opportunity to manage their own money and make their own mistakes on a limited basis under supportive but not overly restrictive conditions. Be consistent.
    Start an online trading account/Purchase shares of stock or a mutual fund.
    Join or form a discussion group. It’s important to find people who share and support your values.
    Turn Off the TV!
    Set saving goals!

In summary, he says, the key components to raising money-smart kids and putting them on the path to prosperity are: starting early; setting a good example; communicating openly and honestly on a regular basis; and routinely involving kids in money-related activities.

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Personal finance

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