Ask a teen what they wish they knew more about and the same answer keeps coming up they want us to teach teens about money!
As kids grow older the need to begin to understand money, but how much do they need to understand? The answer to this question of course changes as the child grows older but the truth is that what kids need to know about money isn’t really all that complicated. Many teenagers tell me that they wished that they had more financial education and understood more about compound interest and the best way to make and save money.
Children and teenagers need to know how people get money, they need to understand its value and they need to know how to save. The only question is how to teach them these things.
Teach Young Children about Money
In a world where financial literacy is a crucial life skill, imparting the knowledge of money management to children from a young age is an investment in their future success. Teaching children about money goes beyond simply explaining the value of coins and bills; it involves instilling fundamental principles of saving, spending wisely, and understanding the importance of financial responsibility. In this blog post, we will explore effective strategies and practical tips on how to teach children about money in a way that is engaging, educational, and sets the foundation for a financially savvy future.
1. Start Early:
The earlier you introduce the concept of money to children, the better. Even preschoolers can grasp basic ideas like the fact that money is used to buy things. Use play money or simple games to make learning about money a fun and interactive experience.
2. Use Real-Life Examples:
Bring children into real-life financial situations by involving them in age-appropriate activities. Take them to the grocery store and discuss budgeting, comparison shopping, and the concept of needs versus wants. Show them how to count money and make simple transactions from an early age.
3. Create a Savings System:
Introduce the concept of saving by helping children set up a piggy bank or a savings jar for their own money. Encourage them to save a portion of their allowance or any money they receive as gifts. This not only teaches the value of delayed gratification but also instils the habit of saving for future goals which are important life skills.
4. Teach Budgeting:
As children grow older, introduce the concept of budgeting. Help them create a simple budget for their allowance or earnings, allocating funds for different purposes such as saving, spending, and even charitable giving. This teaches them to plan and prioritize their expenses.
5. Open a Junior Bank Account:
Consider opening a junior bank account for your child. Many banks offer accounts specifically designed for minors, which can provide a hands-on experience with banking. Monitor the account together and discuss the importance of tracking transactions. A savings account is a really great way of showing children how much money they have.
6. Encourage Entrepreneurial Spirit:
Inspire creativity and an entrepreneurial spirit by encouraging your child to start a small business, like selling handmade crafts. This not only teaches them about earning money but also introduces fundamental business concepts. My daughter often makes crafts which she sells to her grandparents for extra money! When my teenagers were older we need a car boot sale together to raise money for an expensive school trip. Older kids need to see that nothing comes for free!
7. Discuss Money Values:
Engage in open conversations about your family’s values regarding money and financial decisions. Discuss topics such as generosity, responsible spending, and the importance of balancing needs and wants. Share personal stories or a good example to make these values more relatable. Talk to your kids about financial goals if as a family you are saving for something specific like a holiday or home extension.
8. Use Technology:
Utilize age-appropriate financial apps and games that are designed to teach children about money. These tools can make learning entertaining and interactive while reinforcing key concepts.
9. Lead by Example:
Children learn by observing, so model positive financial behavior. Demonstrate responsible spending, saving, and charitable giving in your own life. Share your financial decision-making process with them, explaining the reasoning behind choices.
10. Celebrate Financial Milestones:
Celebrate your child’s financial milestones, whether it’s reaching a savings goal or making a wise spending decision. Positive reinforcement can motivate them to continue practicing good financial habits.
Teaching children about money is an ongoing process that evolves as they grow and mature. By incorporating these strategies into their lives, parents and educators can empower children with the knowledge and skills necessary to navigate the complex world of finance responsibly. Ultimately, the goal is to instill a lifelong foundation of financial literacy, setting the stage for a future generation of financially empowered individuals.
Teach Teens About Money
The conversations about money should start early and of course, be age-appropriate. Parents and carers do this from a young age when playing shops and role-play or getting the children involved when doing the weekly shop.
MoneyPlus looks to teach children good money habits and includes different fun and engaging ways to help children understand the importance of money. They have written content that shares tips to help children learn everything about money, from budgeting, saving, and spending and you can get some creative ideas from them on starting these important conversations.
Teaching a child how people earn money isn’t all that difficult. You can talk about the jobs that people do and how they get paid. However learning to work for their money doesn’t really teach them value. It may seem like it does but unless they work hard for minimum wage they don’t really understand the value, only that they have to work for it. So how do you teach a child the value of money?
There are two ways that I have discovered that teach valuable lessons to teenagers.
The first is to make them truly work for their money and as they get older getting them a summer job is a good way to teach financial concepts.
Most construction companies need gofers and if that isn’t available washing dishes at a restaurant is good hard work. Both of my teenagers were encouraged to have a part-time weekend job – it not only teaches the value of money but it gives them important transferable skills. My two worked in retail and they learnt lots of soft skills during their first jobs which then gave them a head start when applying for university or apprenticeship after compulsory education has finished.
Coming home tired after a day of hard work is a teachable moment and will help them to not only understand the value of money but also the value of education. I do struggle a little internally with the idea that you need to work hard to make money as that’s very subjective. I also don’t subscribe to the idea that hard work pays off because many earn great money without working hard and some work really hard but are trapped in low paid employment and poverty. therefore the idea that hard work always pays off can be victim blaming or at least seen as subscribing to the capitalist ideology. Many entrepreneurs don’t work ‘hard’ they just work smart.
Many young adults need to return home after college or university because the cost of living makes moving out very difficult. Charging adult children rent or for a contribution to the household running costs prepares them for paying bills which they are going to be doing for the rest of their lives.
And finally, we get to the most difficult, teaching them to save. The problem with this is that if they earned the money then it should be theirs and you can’t bribe them to not spend money. One way I have that can work is putting things they want on layaway. This allows them to “save” while buying something that they want, you can do the same with saving for a car but both of these only really teach them to save up to spend money.
Teaching them to have savings for a rainy day or emergency fund is a bit more tricky. To do this your best chance is to begin early. Putting ten per cent of their money into savings should be as expected as anything else. Make it seem like the natural thing rather than the unnatural thing to do.
There are other things that kids are going to have to learn eventually such as balancing a checkbook, paying their bills, avoiding too much debt and other accounting and other small chores that they are going to spend time doing but if they understand these three simply points the rest are going to become far less problematic.
Summary
In conclusion, equipping teens with the skills to manage money effectively is a vital investment in their future success and well-being. As they navigate the transition from adolescence to adulthood, the lessons learned during these formative years can have a profound impact on their financial habits and decision-making.
Teaching teens to manage money goes beyond the practical aspects of the family budget, saving, and spending. It is about instilling a sense of responsibility, fostering a healthy relationship with money, and preparing them to make informed financial choices in the real world. By providing teens with the tools to understand the value of money, set financial goals, and make thoughtful decisions, we empower them to navigate the complex landscape of personal finance with confidence. in short economic education is vital for older teens and adult life.
The journey of financial education for teens is an ongoing process, one that involves open communication, hands-on experience, and a supportive environment. Parents, educators, and mentors play crucial roles in shaping teens’ financial attitudes and behaviours. As teens learn to navigate the challenges and opportunities presented by money, they gain not only practical skills but also a deeper understanding of the values that guide responsible financial citizenship.
Ultimately, the goal is to foster a generation of financially literate and empowered individuals who can confidently manage their money, navigate financial challenges, and contribute positively to their communities. By investing in the financial education of teens today, we pave the way for a future where financial security and well-being is a cornerstone of personal success and societal progress.
Fostering good habits in young people is something that we all should play a role in as money lessons are so important for older children.
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