Elementary school is the perfect age to begin teaching kids about money. Here are 6 lessons to focus on.
When my girls were young, my husband and I secretly shared information with each other by spelling out words.
Most parents of young kids use this trick: “Should we go out for i-c-e c-r-e-a-m tonight?” or “Is it a good time for the girls to watch a m-o-v-i-e?” or “There’s c-h-o-c-o-l-a-t-e on the top shelf of the pantry.”
At such a young age kids are sometimes curious what their parents are spelling, but they’re still too young to really grasp everything happening in their world.
That all changes once elementary school begins. Not only do kids learn how to spell (dang it!) but they’re also developing a greater sense of the world around them and making deeper connections between what they see adults doing and how the world works.
That’s especially true with money – elementary school kids learn a lot about money from both their parents and their friends – what people spend money on and what they save. There’s also a growing sense of what’s “normal” and what is popular among peers.
These years can be a great time to begin teaching valuable money lessons to kids. Especially before kids enter their teenage years when money plays a much larger role in their lives.
Here are 6 Lessons Your Elementary School Child Should Know About Money:
Many of these ideas come from the Consumer Financial Protection Bureau:
Begin to teach kids about earning and responsibly managing money:
Lesson: “People can get money in different ways, and sometimes that means they spend it in different ways.”
- Giving a child an allowance can teach them how to manage money – delay gratification, save for a large purchase, determine what is a “need” and what is a “want”.
- Encourage your child to earn extra money either through entrepreneurship (lemonade stand, for example) or doing work above and beyond chores.
- Be prepared to talk to your child openly about money including your standard of living compared to others.
Elementary school is a great time to introduce the concept of saving money :
Lesson: “Lots of people put money in a savings account to protect it and receive interest on their savings.”
- Practice saving by setting a goal for something your child wants, breaking it down into small steps, and helping him take those steps.
- Introduce older elementary children to banks, by either opening an account at a bank of showing her your online bank site.
- Remind your child about reasons to save: to have the freedom to make choices, to smooth out ups and downs, and to feel security.
- Consider a “matching plan” for your child’s savings: You put in 25 cents for every dollar he saves. Encourage your child to draw, make a chart, or tell a story about how this helps his money grow.
Have kids begin to see the value in sticking to a budget:
Lesson: “Lots of people make lists and plans for what they want to buy with their money.”
- Practice making a list before you go to a store or on a shopping trip. Talk about how easy or hard it is to stick to the list.
- Ask your child to set a goal for something she wants, and talk about the steps it would take to get it.
- Share your own tips and strategies for how you make plans and get yourself to stick to them.
Help kids understand both strategies to save money while shopping, and how not to be taken in by a scam:
Lesson: “It’s a good habit to shop around and compare prices before you buy.”
- With your child, compare prices for a particular toy at various online or brick-and-mortar stores.
- Use coupons and discount cards, and show your child how much you are saving.
- Share stories about times you successfully shopped for a better deal—or missed out.
Lesson: There’s a difference between a bargain and a scam – “Think twice when you see an advertisement or special offer.”
- Explain that “free” offers online, such as cell phone ringtones or games, can be scams to get people to spend money without realizing it.
- Remind your child that even though advertising tries to get you to spend more money, you are the one who decides when you spend and what you buy.
- Talk to your child about times when it’s easy to buy something, like one-click purchases inside a game, or adding something small to what you’re already buying. Explain that’s a good time to slow down and think twice.
- If you’ve been taken in by a scam, don’t be afraid to share the story and what you learned to avoid.
Begin the conversation about credit card debt and why it should be avoided whenever possible:
Lesson: “You should avoid using a credit card to buy things you can’t afford to pay for with cash.”
- Discuss why having a savings and spending plan in place could help your child avoid building up credit card debt.
- Explain that using a credit card is the same as borrowing money. Unless you pay it back in full every month, you have to pay a percentage of the amount you borrow as an extra cost, called interest.
- Drive home this standard: When you use a credit card, aim to pay it back in full each month. Otherwise, you could pay more because you add interest charges.
- Discuss how a credit card can be useful for making purchases online, or as a convenience when you pay it back each month.
- Share your own strategy for using credit cards and what you’ve learned about managing your credit.
As kids begin to have more of an online presence, teach them how to keep their information safe:
Lesson: Keep your personal information private. “It’s a good habit to avoid sharing information online.”
- For her safety, make it a rule that your child never gives out any personal information—like her birthdate, address, phone number, or school—when on the computer.
- Don’t allow her to buy anything online without your permission.
- Explain that entering personal information, like a bank or credit card number, online is risky because someone could steal it. Thieves can use Social Security numbers or other personal information to open credit cards or create fake documents.
- Make it a rule that your child never answers emails from someone she doesn’t know and never clicks on pop-up ads.
And Here’s What Has the Greatest Impaction on Your Child’s Understanding of Money:
Despite your child’s growing independence and taking more cues from friends, parents have the greatest influence on what kids learn about money.
According to a survey by H&R Block, 75% of teens say their parents are their most important source of financial information.
And research shows that parents who frequently talk to their kids about money, compared with those who don’t, raise kids who feel knowledgeable about personal finance and investing.
So even though the days of keeping secrets from your kids are long gone (like: “Should we put this on the c-r-e-d-i-t card?”) and your older kids might even play hard of hearing at times (“I didn’t hear you ask me to pick up my room!”) perhaps there’s some solace in the fact that in at least one area of life your kids ARE listening to you.
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