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How to Teach Your Kids About Money

It’s essential for parents to teach their children about the value of money–saving, spending, and living within their means. In today’s increasingly cashless society, this has become a more difficult task. Don’t despair. Here are three simple tips on how to guide your children to have responsible saving and spending habits.


Start Young and Make It Tangible

The simplest way to get started is to give your child the opportunity to do household chores to earn a cash allowance. This can be making their bed, cleaning up toys, feeding pets, or setting the dinner table. Any age-appropriate tasks will work. 

On payday, it’s important that they have a tangible reward for their work–coins or cash. They are too young to understand the nebulous, cashless world. That will come later. Provide them with a clear jar or piggy bank to store their money in. It’s clear so they can see it fills up as they earn money and empties as they spend it. 

When they are ready to spend their hard-earned money, let them count out what they need, take it to the store, and pay for their new purchase themselves. They will see the money in their bank decrease, understand it was needed for the new toy they purchased, and recognize the amount of work it took to get that toy. It’s a simple, yet powerful lesson. 


Teach Children How Money Can Work For And Against Them

When your children start to get older, you can begin to teach them the concept of interest and how it works both in their favor and also against them depending on the circumstance. 

As your children are saving money each week, set a time to sit down and count it with them. For every dollar they have saved for the week, pay them some interest to reward them for saving. It doesn’t have to be much, maybe five cents per dollar. 

Alternatively, to teach them about loans and paying interest on them, offer to help them pay for something they have been saving for but haven’t yet met their goal. You will give them the money needed and they can pay you back for it when they have it. If they don’t pay you back by a pre-set time, charge them interest on the loan. 

They will learn quickly that saving money is more beneficial than borrowing it. And that the things they buy will cost them less money if they wait until they have saved up for them. 


Debit Cards And The Cashless World

It’s finally time to teach your children about how the cashless side of money works. When they are old enough, open a child-friendly bank account and deposit their earnings there. Get them a debit card that they can begin to use to make their purchases. Teach them how to watch the money going in and going out and what interest is being earned. Take the time to teach them how to balance the account each week and how to read their statement. 


Many child-friendly accounts allow you to put spending limits on debit cards or even restrict where the card can be used. You can start out with a relatively restricted card and open up access more as the child matures, earns trust, and further understands how it all works. 


Your Time & Effort Will Have Great Results

Teaching your children about money can seem like an overwhelming task, but it doesn’t have to be. Take it slow and step-by-step and you’ll have well-educated, smart spenders before you know it.