By Kansas Living on August 9, 2017

Financial FUNdamentals

How to teach kids about money

financial fundamentals

You don't need to create formal lesson plans to teach kids about money. Everyday activities - such as playing store, doling out an allowance, shopping for groceries and buying a piggy bank - can teach children important lessons about spending and saving in easy and fun ways. 

Under 5 

Preschoolers love playing makebelieve. Set up a “store” and use play money for children to shop with so you can talk to them about the exchange of money for goods and services. The imaginary game will introduce them to the idea that there is a cost for their favorite toys and foods — and that the money tree doesn’t exist.  

Ages 6 to 8 

Introduce an allowance so children can begin managing their own money. About 68 percent of American parents give their children an allowance; the average amount is $67.80 per month. More than 80 percent of parents believe allowances teach children about financial responsibility, and this is probably true — especially if you’re offering guidance. 
The first thing you can do is talk about the importance of saving. An easy way to teach kids to save money is by encouraging them to put a portion of their earnings in a piggy bank (or take them to the bank to open up their first account). It’s also useful to help your children make decisions about spending their allowance — talk with them about how much things cost and help them choose carefully among the items they want. 

Ages 9 to 12 

Tweens might want to earn extra cash for special purchases by taking on more chores or running a lemonade stand. In addition to teaching them to save for the things they want — rather than expecting the Bank of Mom and Dad to hand over the funds — start a conversation about charitable giving. Perhaps they donate a portion of sales from their lemonade stand to a local charity or donate some of their old toys after they purchase something new.  

Ages 13 to 15

Teens are old enough to get involved in some real-life financial decisions. Tell them the grocery budget for the week, and have them make a shopping list, compare prices and make decisions about meal planning. Or ask them to research cellphone plans and make a proposal for the best family plan based on cost and services. These exercises will teach them about household expenses and budgeting. 

Ages 16 & up 

Once teens start working, it’s time to have conversations about “adult” topics such as taxes and college financing, including student loans.    

At this age, kids can also be introduced to stored-value cards. The preloaded cards, which look like credit cards, can be used in lieu of cash or credit and teach teens about budgeting.

According to Farm Bureau Financial Services’ 2017 Confidence Pulse Poll, 62 percent of Americans think it’s very important to teach their kids the value of a dollar and how to be financially independent. With that in mind, it’s never too soon to talk to your kids  about money. Using games, rewards and tools that are right for their age  and developmental stage ensures that children have a strong fiscal foundation to help them grow into financially savvy adults.

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