1. Show them how to earn money.
Kids of all ages can learn what it means to earn money, but their age will play a big role in how. Younger kids can be given household chores to complete for a weekly allowance, though it’ll be up to you to decide what counts as a chore. Some parents don’t like the idea of paying kids to do everyday tasks like picking up their room or walking the dog. If this sounds like you, consider assigning “above and beyond” jobs for money. This can include everything from washing the car to folding laundry to unloading the dishwasher.
As your kids get older, they might explore babysitting or pet sitting gigs in the neighborhood. Tutoring is another potential after-school job. It also introduces them to the idea of getting paid by someone who isn’t a parent. Think of it as training wheels before they grow into teenagers who can apply for their first real job.
2. Give them a crash course in budgeting.
Once your kiddos are used to earning some money, the next lesson is teaching them how to manage their cash. An old-school piggy bank or wallet are handy options for little ones because they allow them to see where their money is going. As your child ages, however, you might consider opening a savings account for them. Once a week, you can go with them to the bank and show them how to deposit their funds. Most banks also have apps. This is helpful because kids can see their account balance in real time and watch it grow week after week.
When you feel they’re ready, you can introduce the concept of a debit card. You can also select certain “bills” that they will pay themselves. This can include things like gas and going out with friends. The idea is to teach them the basics of budgeting.
3. Teach them to save.
Speaking of budgeting, it goes beyond just paying bills. Saving is just as important. Begin by helping your child identify some short-term goals. Maybe it’s buying a new toy or app they really want. Older kids might have their eyes on a new video game or shopping trip to the mall.
No matter what it is, now is the time to teach them that saving for a big-ticket item doesn’t usually happen overnight. Instead, it’s about taking smaller, intentional steps that add up over time. It’s a great opportunity to teach them about patience and delayed gratification. It’s something that might pay off when they’re older and financially on their own. It’s also a chance to show them how to balance multiple savings goals at once. On top of that, they can direct cash gifts and other windfalls right into their savings account to see more immediate progress.
4. Introduce them to credit.
Teaching responsible credit habits is one of the most important financial concepts you can pass on to your kids. The average 18- to 23-year-old has $16,043 of debt in their name, according to Experian research. The best way to go about it is to make it real. You can do this in one of two ways.
The first is to add your child as an authorized user on one of your accounts. This allows them to make purchases, but they won’t be responsible for making payments to the credit card company. Instead, they can turn around and pay you each month. If they fall behind, you can charge them interest until they repay what they owe. Consider it a real-life way of teaching them about credit.
You can use the same idea with younger kids without actually adding them to your account. If there’s an expensive toy they want to buy, you can offer to purchase it for them. Then they can pay you back little by little with interest — and you’ll be able to show them how much more they spent by carrying a balance.
5. Give them a sneak peek at investing.
This is probably better suited for older kids who can understand the idea of using money to make more money. The internet has plenty of stock market simulators that you can use together, like The Stock Market Game and How the Market Works. Play to your child’s interests and choose companies that are appealing to them. From there, they can invest make-believe money and watch how their investments fare. Consider it a hands-on way to teach them stock market basics.
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