I recently met with a group of moms and talked with them about finances and parenting. It was a helpful and fun discussion.
Here are some of the questions asked and the discussion that we had about each topic.
1. When should you begin teaching children about money?
Begin introducing money concepts to preschoolers. If a child is old enough to ask for something in a store, they’re probably old enough to start learning about money.
You can begin with coin sorting, then move on to counting games, and finally work on pretend play. Popular pretend to play that kids will naturally gravitate to is shopping. A fun cash register can help facilitate this, but it isn’t necessary.
2. How do you teach your children to save money?
If you’re struggling to find ways to encourage children to save, here are few tips that will help get your children headed in the right direction.
Offer matching contributions. Similar to a 401k match, you can match the money that your children save.
Open a savings account and make withdrawals after earning interest. It seems counterintuitive to withdraw money quickly, but it does help children learn about compounding if they can deposit $5 and withdraw $5.01.
Help your kids set goals. Help your kids cut out pictures of items they want to purchase to establish a visual relationship with their money. Another popular way to track savings for a particular item is to use a thermometer and color in the various savings levels as they work towards their goal.
Using non-monetary rewards. Children are motivated by different things. Some kids, as hard as you try, will place more meaning on non-monetary rewards. Using stickers as an incentive is a popular way for kids to learn about money management at an early age.
3. What if you’re still learning yourself?
Kids imitate behavior that they see, so setting examples is one of the most powerful ways to pass on money management skills to your kids.
For example, if you are saving for something special, like a vacation, it helps to fill a piggy bank just like your kids do.
In addition, beware of the examples you are setting for your kids on a daily basis. You may want to consider using cash, instead of credit cards and checks to show your children how money really works. If you have your paycheck direct deposited, keep in mind that your children don’t see the correlation of work and money.
Teaching children about finances and money management is a process, just like parenting. And of course, what works for one child, might not work for another!
How are you teaching your children money management skills?
|Madison DuPaix is a mom to three young children with a background in finance and insurance. She loves retirement planning and taxes, and recently started her own tax business. Madison is the author of My Dollar Plan and is the guide to Kids and Money at about.com.|