Children can start learning about money, saving, and investing as soon as they can learn to count. Teaching kids to count money is a good way to support the math skills that they learn in the classroom. When we teach our children about money from a young age, we can encourage them to save, and show them how money can grow with compound interest.
Here are some things to think about:
- When giving children an allowance, give them the money in denominations that support savings. For example, for young children who receive $1 a week, give them 4 quarters, and ask them to put at least one of the quarters in a jar for savings. If your child receives $5 a week in allowance, give them five dollar bills instead of a five dollar bill and have them set aside one dollar or more for savings.
- Take your children to a bank to open up their own savings accounts. Many financial institutions offer special accounts for young people to help get them in the habit of saving.
- Show kids how to keep records of money saved, invested, or spent. One system is to use 12 envelopes, one for each month, and a larger envelope to hold all the envelopes for the year. Have kids place receipts from their purchases in the envelopes and make note on the envelope of what they did with their money.
- Shopping trips are an opportunity to teach children the value of money. Compare prices together as you go through the store, use coupons, and look for sales.
- Let children make spending decisions. This is how they learn, by choosing how they will spend their own money and then living with that decision.
- When using a credit card, use that time to teach your kids how credit works. And remind them when the bill comes and you have to write a check, so that they can see that a credit card is not just “magic” money!