How to teach your kids about money

tfitzpatrick//April 23, 2020

How to teach your kids about money

tfitzpatrick//April 23, 2020

Although the coronavirus pandemic has caused some uncertainty in the financial world and the effects will most likely be felt for years to come, now is a great time to teach your kids about money.

As more and more people have embraced the idea of a cashless economy, discussing financial topics with your kids can be beneficial. According to a 2017 survey conducted by T. Rowe Price, parents who discussed financial topics with their kids were more likely (61% vs. 41%) to have kids who say they are smart about money.

Here are a few ways you can discuss financial topics with kids, from toddlers to teens, according to TheSimpleDollar.com.

Introducing money

Ages: 3-5

Topics: Earning, spending, saving, giving

– Allow your kids to earn an allowance by completing simple chores.

– Kids tend to consider their spending choices more carefully when they’re spending money they’ve earned.

– Have them learn to save for more expensive items they might want to purchase.

– Teach your child to give 10% of their money to help others.

How people spend

Ages: 6-10

Topics: Goods vs. services, needs vs. wants, short-term vs. long-term goals

– Help kids learn that money is sometimes spent in return for another’s efforts or services.

– In addition to handling cash for wants, also let your kids do budget-related household talks (planning a week’s worth of meals).

Introducing consequences

Ages: 11-3

Topics: Credit, debt, interest, budgeting, identity theft

– To help establish a strong credit score for your children, consider making them an authorized user on your credit card.

– Consider setting spending limits.

– Explain that interest means that money grows in value over time.

– Help them keep track of their expenses by setting short- and long-term financial goals.

– Explain the essentials of how to protect their identity while online.

Building wealth

Ages: 13-15

Topics: Work, banking, investing (bonds vs. stocks)

– Having your child get a job helps reinforces a sense of responsibility.

– Have your child open a separate (but monitored) account for their savings.

– Present bonds as the safer option and associated stocks with higher-risk, higher-reward scenarios.

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