Teaching Your Kids About Money Can Start Early
You may not think you need to start talking to your kids about money until they get their first job or start applying for college. However, introducing your kids to financial concepts early can help them develop a stronger understanding when it’s time for them to start earning and spending their own money. Children as young as toddlers are able to comprehend simple concepts like spending, saving, and earning, when you lay the groundwork early. Here are some concepts you can introduce to your kids early, so they understand money later.
Much like how learning to read starts with learning the alphabet, financial literacy starts with counting. Children as young as 2 can start understanding number sequences and may be able to count with you out loud. You can practice counting with everything from toys to items around the house to items you pick up at the store.
Spending and Earning
By the time they start kindergarten or first grade many children have an understanding of the assigned values on coins and bills. You can start introducing the concepts of spending and earning by giving them a small allowance and letting them make a purchase of their choice like a toy they want. Go over with them how much the toy costs and how much they will have to earn before they make the purchase.
The American Institute of Certified Public Accountants reports two in three parents give their child an allowance averaging about $30 per week. Yet, only 3% of parents said their children are saving this allowance. Set a long-term savings goal with your children and teach them to save along with spending their allowance. When you are paying your children an allowance it’s important to pay them regularly, so it’s like a paycheck.
Introducing financial concepts to your children early, prepares them and you for a better financial future. When your children understand spending, earning, and saving they will be more cognizant of income and budgeting when they are working or managing student loans.