Math and money go hand-in-hand, both of which you can make fun to learn! Check out these 10 Ways To Teach Kids About Money tips, and be prepared to bust out the lemonade stand!
Money is a necessity in life and something on everyone’s mind, yet it can be a very touchy and uncomfortable subject. Nevertheless, handling money is a necessary life skill, and what better time to start then when children are young? Here are 10 ideas for teaching children financial basics from savings to taxes to giving back.
1. Set up a lemonade stand. Or a smoothie stand.
There is no better way to practically teach children about finances than a basic lemonade stand. You will learn about loans (from Mom and Dad), expenses, revenue, and more. In the process, you’ll make a few extra bucks, and learn about earning money the American Dream way. For really inventive kids, they can go beyond a typical lemonade stand and create a spin on their lemonade (strawberry-flavored, anyone?) or create a smoothie or iced tea stand – or some baked goods, too!
2. Take kids grocery shopping with you.
Figure out the best deals in regard to brand, quantity, and price. Clipping coupons, sales, and more are everyday ways for teaching kids the best bang for your buck. It’s also important to teach them that you shouldn’t always choose the cheapest item or the most expensive by going online and reading other peoples reviews of those products.
3. Help your kids set up a bank account.
Creating a bank account in the child’s name teaches saving and interest. It also may be a good idea to put your child’s “save” money in the bank (see below) – so there is not a constant temptation to immediately spend it. Plus, kids loveto see their name on things – they may think this is the best thing ever!
From saving for a new bike to investing their allowance online, kids get the “cents” they need with this. Kids will also learn how coins and bills are made, fun financial technology, and what money can buy (+ more)! Get it here.
4. Create the “three envelopes” system.
Save, Spend, Give. Instead of a piggy bank, create 3 envelopes (or mason jars, shoe boxes, etc.) and mark them “Save, Spend, Give” respectively. This is a visual way for kids to sort the money they’ve made and budget accordingly, as well as teach them how to give back to others. A simple idea is 10% spend, 10% give, 80% save. (“Save” is for bigger purchases, like trips, electronics, bicycles, or college) Once the envelope is emptied for the month, they may not take money out of the other envelopes.
5. Offer the chance to earn extra money through extra chores.
Picking up toys and setting the tables are regular family chores; however offer a dollar or two for out-of-the-ordinary chores: cleaning the trampoline, pulling weeds, cleaning the bathrooms, etc. Deduct for a sloppy work-ethic, add for a thorough job.
6. Teach spending within your means.
Susie gets $10 a week for allowance. She must put $1 into giving, $8 into saving, and $1 into spending. As she grows her “spending” – she must choose what she will spend it on: movie tickets, or a trip to the zoo. A new CD, or extra candy. If she wants to save up for movie tickets, she cannot spend the money on extra candy. This is the most practical way to teach living within your means. Sometimes, “teaching” may be letting that child spend the money on frivolous things and learning from it.
Recommended for ages 3+. I loved playing with the money in Monopoly and pretending I was a cashier on my grandma’s old typewriter, and this set would have been the best when I was little! Get it here.
7. Teach saving up.
Saving up isn’t always easy, but in the end, it’s definitely worth it. You can use the “Save” section in the “three envelopes system” for this. Your child may be wanting to put extra “spend” money in “save” for a bicycle – however upon just getting paid, it’s easy to spend frivolous money. This is where the envelope system comes in. Teach how patience is truly a virtue, and then take it a step further and use a calendar to show them how long it will take them to reach their savings goal!
8. Teach taxes.
“The best way to teach your kids about tax is by eating 30% of their ice cream” or deducting, say, 7% from their allowance. You can’t teach money with getting into taxes. Property taxes, income taxes, and sales tax!
9. Teach giving.
Teaching about giving is just as important as teaching saving or spending wisely. In the Bible, we are told to give regularly (1 Cor. 16:1-4) but not give for selfish or boastful reasons (Matthew 6:1-2). It’s also important to note “giving” doesn’t always have to be in the form of tithing at church; it can also be gifts for grandma, friends, strangers/a local charity, or perhaps paying for the meal of someone behind you at a drive-through.
10. Be a good example.
Kids learn by example. The truly best way to teach kids practical life lessons about money is through being a good example. Take your kids to the bank with you or login to your banking account online and show them how to transfer money to a savings account from your regular spending account. Or, get yourself a piggy bank and show your kids that you “deposit” some of your money in there, too!