If you are worried about getting started too early with the money management lessons listed below, it’s important to note that children begin to develop an understanding of many basic financial concepts when they are as young as seven years old, according to research conducted by the University of Cambridge back in 2013.
Play Games with Your Kids That Involve Money. Competition is one of the best ways to get kids to retain information. So, playing games with your children that revolve around finances, like Life or Monopoly, will help your kids learn the importance of budgeting and planning for the future.
Give Your Kids an Allowance and the Freedom to Spend It. As soon as your kids understand that we all use money to purchase the things that we want, start giving them a small weekly allowance in exchange for doing chores around the house. This will teach them that money has to be earned. An allowance will also offer your children invaluable first-hand experiences with money. They’ll see the rewards of saving and experience the risks of making impulsive spending decisions early.
Give Your Kids a Place to Save Money. Even before they’re old enough for bank accounts, you can help your kids get in the habit of saving money by giving them a piggy bank or jar where they can deposit their allowances. Learning to save is an essential life skill that will build discipline and demonstrate the virtues of delaying gratification, as well as teach them the value of goal setting.
Show Your Kids How to Be Smart Consumers. You shouldn’t micromanage your kids’ spending, but before they buy something, walk them through comparison shopping for prices and quality.
Teach Your Kids the Basics of Credit. Once your kids are old enough to understand what credit is, consider allowing them to borrow small amounts from you against their allowances when there’s something they want to buy that they’re impatient about. You could even negotiate how much they’ll need to pay you back out of their allowance each week, and remember to keep track of the remaining balance until the debt is repaid. It will teach them downsides of credit and the value of saving.