5 ways to teach your kids about money

While 75 percent of parents believe it’s important to talk to their kids about money, 41 percent admit that they avoid the topic with their kids. In fact, according to a T. Rowe Price Survey, many parents believe that it’s easier to talk to kids about sex than it is to talk to them about money. The problem is that kids draw their own conclusions if you don’t talk to them about finances, including “off-limits” topics like personal income and household debt. The conclusions they draw are not always good, and may lead to the development of poor saving and spending habits. Fortunately, there are good ways to teach your kid about money to develop lifelong, healthy financial habits.

 

  1. Allowance and Savings. If you don’t already, start paying your child an allowance as a reward for chores done. Experts say kindergarten is a good age to start giving kids an allowance. At the same time, open a savings or checking account under their name, and encourage them to put a little money in it each month. Encourage them to put part of any monetary gift (like a check from their grandparents for good grades) into savings as well. Have them set a long term savings goal to buy something they want like a bike or a video game.
  2. Discuss Bills. Don’t leave your kids in the dark when it comes to your bills. Let them know how much you spend as a family on electricity, gas, your mortgage, and more. Let them know how things they do like using the air conditioner, or making more phone calls can affect your bills.
  3. Money Games. Many board games and video games can help teach kids about money. Classic board games like Monopoly, or computer games like SimCity encourage kids to save, budget, and invest. These simulated situations can teach your kids real life financial savvy.
  4. Talk About Debt. Make sure your kids understand the ins and outs of debt and borrowing. Explain to them how credit cards work, and why some debt can be good for establishing lines of credit and maintaining a good credit scores while other debt, or too much debt, can be bad.
  5. Introduce Them to Money Tech. The way we spend money is changing rapidly. Make sure to show your kids how money tech works. Take them through your online banking accounts. Show them how you can use an app on your smartphone to deposit a check. Explain how payments are changing and fewer people are using cash to pay for things.

While talking to your children about money may seem scary, remember, it is essential. Using these techniques, you will be well on your way to raising children who know how to spend, budget, and save.