Most parents would likely say that having a baby is expensive, but there are likely mixed results if you were to ask parents “are babies or tweens more expensive?” The fact is, according to the American Institute of CPAs, 68 percent of parents give their children an allowance. And, even if your child is telling you otherwise, the same study found that most kids are working for the allowance. Aside from having your child work for money you give them, what can we do to teach kids about money and money management?
Best resources to teach your children about money
There are many philosophies about money, how it “should” grow and, of course, many people have different ideas about giving, so it is important to recognize that while these are overall resources I recommend, I understand that each family will have a different philosophy. But, at some point, we all need to teach children about money. But, not all resources will work for all kids, especially when they get older.
Some blanket thoughts on teaching kids about money are:
a young child should get an idea that items cost money,
a tween should understand a bit about taxes (why their dollar store item costs more than a dollar, for example),
A teen may need to get a lesson in both interested and income tax.
Here are resources for kids to learn about money, at various stages of life.
Starting out with financial literacy
When your child is first born, you may want to get in the habit of saving monetary gifts of small amounts in a piggy bank. This way, your child always “sees” money being saved. Larger amounts may go directly into a savings account that you can create for your child at birth. Most banks and credit unions have low minimum balances for accounts with the child as the primary account name.
You can choose a piggy bank that matches decor or go with a more traditional bank. If you’re having a baby shower, you can include one of your choice on your registry even!
Another option is to choose a digital piggy bank that counts coins as they are added into the bank. Some parents like this for ease of saving and counting, while others prefer one that allows (requires) their children to really know how to count money.
Starting in kindergarten or once your child can count by 1s, 5s, 10s, and 25s, you can introduce workbooks and a handful of coins to help kids learn to count money.
Kids love play money as well, so when you aren’t sitting with them counting, you can also just make it part of their pretend play. And, of course, play money is much better than real money when it comes to that!
Introducing more money concepts to your tween
When your child fully grasps counting money, you may want to take a trip to the bank to show them how you deposit money, and show them a statement which shows how money grows with interest.
Additional ideas for teaching your tweens about money include:
Teaching them to save, spend, and share. This bank is a visual way for them to see where their money is going.
Allowing them to work for money with a garage sale, lemonade stand, dog walking for neighbors. There really are a lot of kid-friendly work options. It will be your choice if you make the kids pay for their start up costs (stickers at the garage sale, cups and supplies for the lemonade stands, poopy bags for dog walkers). It will help them see the true cost of business too!
Ensuring that, when they have money, you make them spend “their” money rather than you just buying them something that is for their fun and benefit only.
Help your teenager grow their money
For your teen, you can begin to introduce them to even more in-depth concepts, so they can be financially literate, and hopefully, more responsible with their money. For example, you can have your tween:
Learn about investment options, books like the one above, introduces Blue Chip stock ideas to them in a fun way.
Understand how interest rates work, especially when it comes to borrowing money.
Get them started with real investing. This book actually gives your child $10 off their first stock, which almost pays for the book. Score!
You can really help your kids learn about how money and economics work. Over time, introduce more concepts, and allow them to fail at times (when they spend all their money one month and then don’t have money for the next greatest thing, show them options to earn money, rather than just bailing them out), and you may just have a more financially literate young adult.