1. Explain what money is and be sure they understand how to earn money.
So what is money? And how do we teach kids about money? Money is anything that people use to buy goods or services. We receive money by selling the things that we have, selling something that we created, or by offering services that we can conduct.
2. Discuss the difference between wants versus needs.
A need is something you must have to survive, like food, water, and a home. It’s nice to have a want, but you can live without, like ice cream or a new video game.
3. Explain Spending, Saving, earning, and giving
Saving: Through Allowances
In our blog, Money Milestones For Children & Youth, we explain how children can learn to save money and manage their money through allowances.
Researchers and experts say that the proper and usual allowance is $1 per year of age. Experts also state that allowances shouldn’t tie to household chores and duties. Allowances should be used as a tool to teach your child about managing their money, not as a bribing tool.
Earning: Give Commissions
Commissions are an excellent way to teach your youth that money is earned, not just given. Find opportunities where children can earn a commission for doing something.
Spending: Smart Purchases
As your child grows and learns about money, teach them where the money you earn goes. In elementary school, kids begin to understand math. You can start to build intelligent spending habits by explaining where hard-earned money goes, including bills, food, and shelter. These early lessons begin to instill that stuff costs money.
Giving: A Kind Human
Raising well-rounded and kind humans is what all parents strive. While teaching our children about money, we must teach them about giving. Have a conversation with your child about the importance of giving. From there, find a charitable organization they would be willing to provide a percentage of their earnings.
4. Teach the coins relation to the dollar
In our book, BUCK Making Cents, we use an interactive lesson plan for parents to engage with their kids in the early u
nderstanding of the value of money. The character BUCK, a f
riendly personification of a dollar, breaks money down to the basics and what it takes to “make a buck” to
create a new society of young savers and investors. BUCK is a fun, innovative, and engaging character and helps guide the conversation, so the lesson is from an “expert.”
5. Talk to them about money in life as it happens. Kids are sponges, and they retain more than you think.
You can start teaching your child what things cost within your home as a form to educate around eight years old. Have your child sit down with you and make a small budget and shopping list. Your child is advanced enough to quickly understand the concept of money coming in and going out by now.
Here is a recap from BUCK on how to teach kids about money:
Explain what money is and be sure they understand how to earn money.
Discuss the difference between wants versus needs.
Explain Spending, Saving, earning, and giving
Teach the coins relation to the dollar
Talk to them about money in life as it happens.