Teaching your kids about money is an essential component of building a secure financial future for your young ones. However, you need to do this methodically. There are some things more important than others at each age. Familiarizing kids about money from a young age is a good strategy to teach them about the value of money. Thereby potentially they can be good at managing debt.
Teaching Your Kids About Money:
The following series of videos produced by ACCC explains what each age group should be learning. Following these videos will make it easy for you to begin teaching your kids about money.
Teaching Your Kids About Money -Grades K-2:
What should each age group focus on?
- Preschool: focus on identifying different types of coins and counting and sorting them.
- Kindergarten: focus on how much each coin is worthwhile drawing equivalencies between difference coins (ex. 5 pennies makes 1 nickel).
- First & Second Grade: focus on how to use the fewest amount of coins to get to certain amounts, and whether or not the child has enough money to buy different items at different prices. Also, introduce how to make change.
What are the key lessons?
- Money is exchanged for goods and services
- Buying something means exchanging money for it
- The amount of money needed to buy something is called the price
- Different goods and services have different prices
- Some things are free and don’t cost money
- If you don’t have enough money to buy something you can either save up to buy it another time or buy something else
Money is an exchange for something you need or want. Children see money exchanges but don’t fully understand the value money holds on life’s necessities.
Teaching Your Kids About Money – Grades 3-6:
What are the important lessons?
- Making Choices: When you make a choice you give something up. It is important to weigh the costs and benefits of each situation.
- Needs vs. Wants: Things you can’t live without, like shelter, food, and clothes are needs. Things that are nice to have but aren’t necessary to live, like games, candy or toys are wants.
- Earning Money: When you earn an income, you receive money for the time and effort put into the job. The more you work, the more money you can earn.
- Budgeting: A budget is a plan that balances your money. With a budget, you know what money is coming in and what money is going out.
- Savings: Saving means putting your money aside now so that you can use it later. Set a goal and save a little bit of money per week to buy something special.
Teaching Your Kids About Money – Grades 7-12:
What do I do with the money I make?
- Spend it all?
- Put it towards savings?
- Know where all the money went once it’s gone?
Saving is much easier if you know what you are saving for and how much money you need. The best way to do this is to set SMART financial goals.
SPECIFIC: What exactly needs to be accomplished? Who else will be involved? Where will it take place? Why do I want to accomplish this goal?
MEASURABLE: How will I know I’ve succeeded? How much of a change do I need to make? How many accomplishments or actions will it take?
ACHIEVABLE: Do I have or can I get the resources needed to achieve the goal? Is the goal reasonable? Are the actions I plan to take going to bring me success?
REALISTIC: Is it worthwhile for me right now? Is it meaningful? Will this delay or prevent me from achieving more important goals? Am I willing to commit to achieving this goal?
TIMELY: What is the deadline for achieving this goal? When do I need to take action? What can I do today?
ACCC’s Youth and Money financial education section is a great resource for parents to talk to kids from age five through college about money. Our resources include material for kids as well, with fun activities and games for all ages. Visit www.consumercredit.com today!