Family Time: Teach Your Kids About Money

Although the coronavirus pandemic has caused some uncertainty in the financial world and the effects will most likely be felt for years to come, now is a great time to teach your kids about money.

As more and more people have embraced the idea of a cashless economy, discussing financial topics with your kids can be beneficial. According to a 2017 survey conducted by T. Rowe Price, parents who discussed financial topics with their kids were more likely (61% vs. 41%) to have kids who say they are smart about money.

Here are a few ways you can discuss financial topics with kids, from toddlers to teens, according to TheSimpleDollar.com.

Introducing money

Ages: 3-5

Topics: Earning, spending, saving, giving

• Allow your kids to earn an allowance by completing simple chores.
• Kids tend to consider their spending choices more carefully when they’re spending money they’ve earned.
• Have them learn to save for more expensive items they might want to purchase.
• Teach your child to give 10% of their money to help others.

How people spend

Ages: 6-10

Topics: Goods vs. services, needs vs. wants, short-term vs. long-term goals

• Help kids learn that money is sometimes spent in return for another’s efforts or services.
• In addition to handling cash for wants, also let your kids do budget-related household talks (planning a week’s worth of meals).

Introducing consequences

Ages: 11-13

Topics: Credit, debt, interest, budgeting, identity theft

• To help establish a strong credit score for your children, consider making them an authorized user on your credit card.
• Consider setting spending limits.
• Explain that interest means that money grows in value over time.
• Help them keep track of their expenses by setting short- and long-term financial goals.
• Explain the essentials of how to protect their identity while online.

Building wealth

Ages: 13-15

Topics: Work, banking, investing (bonds vs. stocks)

• Having your child get a job helps reinforces a sense of responsibility.
• Have your child open a separate (but monitored) account for their savings.
• Present bonds as the safer option and associated stocks with higher-risk, higher-reward scenarios.

 Source: JDNews.com