Teach your grade-schoolers about finances in 6 easy steps.
While a majority of parents speak with their kids about money at least periodically, only slightly more than half (56 percent) have begun to engage their youngest children in financial literacy, according to a BMO Harris survey.
Here are 6 proven (and simple!) ways to introduce your grade-school children to basic financial concepts that will prepare them for a lifetime of responsible saving and spending:
- Offer occasional opportunities to earn money: Build a sense of responsibility and independence by creating a payment system for small chores, like cleaning out a closet or sorting laundry. Consider using a tech tool like ChoreMonster®, which lets parents reward kids with things like extra TV time or allowance, to track task progress.
- Encourage kids to save: Explain how to set and save for a goal. Help your child divide funds earned on household chores partially into a spending allowance to buy something fun and partially into savings, storing the money in a piggy bank or money jar. Once a month, count how much has been saved to get your child excited about the money that’s accumulated — and encourage your child to save more. Help track what’s been saved with a kid-friendly free finance app like Bankaroo®.
- Open a joint account: Kids will feel a sense of pride knowing they have their own savings account, which can help your child develop good financial habits that’ll continue into adulthood — including saving regularly and not spending everything. These Consumer Financial Protection Bureau’s tips can help you make your trip to the bank a valuable learning experience.
- Let kids spend what they earn: Giving kids the freedom to make their own choices (and mistakes) can be a valuable money lesson. For example, if your child spends his entire allowance the first day he gets it, and has no spending money left for the weekend, he’ll quickly learn to ration what he earns. An allowance tracking tool that lets you enter assigned values for each task, like the free A+ Allowance® app, can help show your child what’s been earned each day.
- Create a spending budget together: As a family, sketch out a list of weekly or monthly budgeted expenses for your child, based on entertainment costs, like going to the movies, buying new clothing and other purchases. Then estimate how much of your child’s allowance and other earnings can be put toward each item, which will help your child learn to distinguish between wants and needs. Print out sample expense and budget worksheets and check out an online budgeting calculator from Practical Money Skills™ to get started.
- Illustrate the importance of giving back: Brainstorm ways to fundraise, such as organizing a lemonade stand and donating the proceeds to a cause. Encourage your children to also set aside a portion of their savings for charitable donations — a great lesson to instill at a young age and continue to practice as they grow. Find out more about U.S. charities’ missions, financial data and overall impact through GuideStar® before you make a donation.
For additional spending and saving money lesson tips for your younger or older kids, check out 5 fun ways to help your preschooler learn about money and 6 ways to start preparing your teens for financial independence.