How and Why to teach kids about money

One of the biggest drawbacks of the American curriculum is the absence of a purposeful, structured course on money management. The Council for Economic Education promotes financial literacy in schools, but the responsibility mostly falls on parents to teach younger kids as much as they can about money.

However, starting these conversations – and keeping children engaged throughout the process – is much easier said than done. Whether you’re a new parent or an elementary school teacher, it's always worth learning a few of the easiest ways to teach kids about money.

Why is it important for kids to learn about money?

While it might seem a daunting or long-winded task, teaching children how to use money could be a confidence-booster in more ways than one. Along with helping you feel secure in the fact that you’ve given your child the tools they need to succeed, you’ll know that the skills you’ve taught will last a lifetime.

When children learn the basic principles around money from an early age, they’re more likely to make careful decisions around spending, saving, and lending. So how can you instill healthy habits from an early stage?

Teaching children about money: Three easy steps

Set a good example

As with any other behavior or habit, children look to the adults in their life to learn. As a parent or carer, it’s your responsibility to teach and lead by example – and money management is no exception. Above all, you should never make impulse purchases or reckless financial decisions in front of your kids.

Whether you’re setting a weekly budget or planning for a big purchase, try to do so openly and with an organized approach. Your child might ask more out of curiosity, or you could mention your plans and explain how you saved up.

Make it accessible

As with any new information, teaching children about money can become overwhelming if you try to take on too much at once. Try to tailor your lessons to your child’s age and existing understanding of how money works, while still providing them with relevant tools to explore the topic at their own pace.

For example, stick to simple concepts for younger children. Using fake coins as ‘pocket money’ or giving them a small budget in the grocery store could both be lessons disguised as games. But gamifying financial literacy can be difficult, so don’t be afraid to approach concepts at face value.

If you’re teaching teenagers, there’s nothing wrong with introducing more complex ideas like loans and credit. For young adults, the importance of building and improving your credit score should be taught as a priority.

Encourage saving

There are so many ways to encourage your kids to save money. Start, for example, by putting money in a clear jar. You could use different jars for different coins, turning it into a challenge to see which of your kids fills up their jar the fastest.

Or, for the older kids, explaining how savings accounts work and showing them a digital savings account could be useful too. Once they’ve reached the accepted age, setting up a savings account for your child could be a great proactive step in the process.

Conclusion

While teaching your kids how to manage their money is important, it should never be a case of lecturing them on something they’re not interested in.

Try to get as involved as you can, showing your kids the practical steps involved in looking after their finances. Set a good example and give them the freedom to make their own decisions, responding to their mistakes with compassion and patience.