How to Teach Young Kids About Money and Build Financial WellbeingAug 22, 2022
Teaching kids about money early can help them develop the skills they need to build financial wellbeing and financial resilience for years to come. An early foundation can help them build financial confidence and create a healthy relationship with their money before they even start school. According to a recent study by BYU, kids who learn financial literacy from their parents early are more likely to have better financial habits and romantic relationships in adulthood. Kids pick up money habits and beliefs from a young age, and you can purposefully create ways to start their money journey out in a healthy, mindful way.
Introducing Young Children to Money
Introducing young kids to money can be as simple as showing them cash and coins and starting the conversation. Make a game of identifying different coins by design, size, and color. As kids grasp the basics, start introducing cash and coin values, how coins can add up to dollars, and counting change. Money skills are a great addition to basic math skills, so aim to match money lessons in an age-appropriate way.
Positive Money Practices at Home
Kids can be fantastic sponges, but they can struggle to focus for long periods of time when learning at home. To find an easier rhythm to teaching your kids about money, find positive and fun ways to get kids involved. Family game nights are a fantastic place to start, and there are many traditional board games and creative activities that can spark interest and money conversations at home. Besides games, consider getting young kids involved in the kitchen or with grocery shopping to introduce math and money skills.
As your child’s knowledge grows, consider starting an allowance or creating ways for your child to practice earning and managing their own money. The earlier your child starts practicing with money, the better prepared they’ll be to handle their finances later in life. An allowance or money system can also help kids form a positive relationship with money early and build a solid foundation of good money habits.
Start a Kids Money Jar Practice
Consider setting up an allowance system with a set of clear jars your kids can put their money in and watch it grow over time. Set jars up where your kids can easily access them and help them sort their allowance into jars based on goals you can discuss together. Use jars for spending, saving, investing, and sharing to help kids learn how to manage their money early. You can create opportunities for them to earn money or start a regular allowance system to introduce them to the concept of income. Help them learn how to make wise choices with their money by discussing different ways to spend it, save it, or put it toward future goals. Starting a practice of giving to charity or sharing with others is a great way to help children develop empathy and learn how to be kind with their actions and money.
As you get started with your own money jar system, consider:
- Allowance amounts
- How often allowance is paid
- Additional Chores and responsibilities
- Birthday and holiday money
- Setting goals and rewards
Supporting Wellbeing and Financial Resilience
Many parents focus on teaching their kids healthy habits like eating their vegetables and brushing their teeth. We know health is important, and we want to give our kids the best foundation we can to live a healthy life for years to come. An essential part of wellbeing we often overlook is our relationship with money, but it has a massive impact on our lives throughout adulthood. Positive money habits support a lifestyle of wellbeing and build financial resiliency as kids practice handling money challenges.
Positive Money Habits and Benefits for Kids
Kids benefit from learning about money while they’re young since there’s room to make mistakes, overspend, and see the consequences of their actions without going into debt. Kids who have room to make mistakes and learn with their money can build more financial resilience and better money habits for the future, supporting their overall wellbeing as their independence grows.
Finding a Rhythm to Teaching Kids About Money
Patience is key when teaching young children anything, and money lessons are no exception. Kids are excellent learners, but they may need to see how it’s done a few times and ask questions before they understand a topic. Money can be complicated, even for adults, so don’t feel like you’re failing if you find yourself overwhelmed. Keep lessons simple and remind kids the most important part of managing money is starting with a good mindset and being willing to learn. We don’t need to be rich or have our finances perfectly put together to start teaching our kids better ways to prioritize financial wellbeing. Instead, we can focus on building positive habits and a better relationship with money one step at a time.
For a more in-depth look at teaching young kids about money, download my free My First Million Mind Map - How to get your kids started. For those looking to build a better relationship with money, consider financial therapy to kickstart your journey today.
For further reading, please check out Annuity.org's, How To Teach Young Kids About Money guide for a deeper dive in to how to best support your kids.
Questions: email [email protected]
Mariah Hudler, MSW, MBA, CFT-I™ is a financial therapist, coach & consultant, who provides premarital financial counseling, financial therapy, financial coaching & consulting, and financial wellbeing services. She works with individuals, couples, entrepreneurs, and groups to build their balance and create a healthy relationship with money.
Disclaimer: This blog is for education only. Please consult with a qualified professional when you have any questions about your personal financial, tax, or legal situation. Information contained in this post is for informational purposes only and not intended to replace professional advice.
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