Back to School: Teaching Kids About Money and Savings
As children head back to school, there’s an essential subject that often doesn't find its way into the classroom: financial literacy. Teaching kids about money and savings is crucial for laying the foundation for strong financial habits in the future. Whether your child is starting kindergarten or entering high school, it’s never too early or too late to start learning about money management. Here are some practical ways to teach your children about money and encourage smart financial habits.
1. Start with the Basics: Earning and Saving
Before diving into more complex concepts like investing or credit, kids need to understand the basics of money—earning and saving.
Chores for Allowance: Assign chores and provide an allowance as a reward. This not only teaches the value of hard work but also introduces them to the concept of earning money.
Piggy Banks: Encourage younger children to save their coins in a piggy bank. As they watch their money grow, they'll learn the fundamental joy and benefit of saving.
2. Open a Kids’ Savings Account
Many financial institutions offer children’s savings accounts that can be opened with low initial deposits. These accounts often come with no fees and provide a practical way for children to watch their savings grow.
Visit the Credit Union: Take your child to the credit union to open the account. This can be a fun and educational field trip, giving them a sense of maturity and responsibility.
Track Growth: Show them their account statements and discuss how their money is increasing through interest.
3. Use Budgeting Apps Designed for Kids
In the digital age, several apps are designed to teach kids about budgeting and saving in an engaging way. These apps can help children make decisions about spending their allowance and saving for bigger purchases.
App Recommendations: Look for apps that are intuitive and have good educational resources. Apps like 'Bankaroo' and 'iAllowance' are great places to start.
4. Play Games That Involve Money
Games can make learning about money fun and interactive. Use board games like Monopoly or The Game of Life to discuss financial decisions and their outcomes.
Discussion Points: Talk about why they might choose one form of investment over another or the consequences of accumulating debt within the game.
5. Set Savings Goals
Help your child set specific savings goals. It could be a new toy, books, or saving for a school trip.
Visualize Goals: Create a chart or visual representation of their goal and track their progress. This makes the goal more tangible and the saving process more rewarding.
6. Encourage Charitable Giving
Teaching children about charity can be a powerful way to show them the value of money beyond personal spending. Discuss different charities and let them choose where they might want to donate some of their savings.
Matching Contributions: To encourage them, match their donation to show that their charitable efforts have even greater impacts.
7. Discuss Wants vs. Needs
This is a crucial concept in financial literacy. Discuss with your children the difference between wants and needs to help them make thoughtful decisions about spending their money.
Practical Examples: During shopping trips, discuss items that are wants (toys, games) and needs (school supplies, clothing) and how to budget for both.
Conclusion
Back-to-school season is a perfect opportunity to integrate these lessons into daily routines. By teaching kids about money management, you’re not just preparing them to be savvy savers or spenders; you’re equipping them with the skills to make informed financial decisions throughout their lives. Remember, the goal isn’t to overwhelm them but to gradually introduce them to the world of financial responsibility in ways that resonate with their experiences and aspirations.