Seeing the look on a child’s face when they are handed a five dollar bill is priceless. You would think that they had just received the keys to the Magic Kingdom by the way they clutched the cash in their hand.
But how do you teach your child the value of money? How do you move them from being in love with money to becoming a good steward of it?
Giving children a reason to save money other than being able to spend it on toys can help them see the value in how money can influence their future. You don’t even need to use real money to teach them how to save. Use play money, marbles, tokens, or even chocolate as a reward for accomplishing certain tasks so that they can strive for a predetermined incentive.
Incentives can include allowing them to pick a restaurant for family dinner if they’ve saved a certain amount of “currency” by the end of the week. Or you can challenge your child by having them spend money on certain everyday items like toilet paper or bottles of water and then reward them based on the surplus.
Showing your child the benefits of using money wisely will instill healthy habits.
Future purchases are a necessity when it comes to financial independence and success. Often immediate incentives aren’t available so the value of setting concrete fixed goals is very important. As a child (as well as an adult honestly) it’s easier to save money when what you want is right around the corner.
Teaching the value of establishing long-term goals is a tough but vital lesson.
Bring your child into the decision-making conversation to allow them to express their desires and what they think it will take to achieve them. Help them determine how to set goals by actually instituted a course of action.
It doesn’t have to be anything like saving for college, but perhaps something along the lines of purchasing a new bike or saving up for a really cool birthday party the following year.
Set up weekly meetings to discuss their progress and make any adjustments as needed. It could be really helpful to walk through your own finances to demonstrate how to track progress and let them see real money in real time. Be honest about your assessment of how they are doing and give advice on what they need to improve.
It is never too early to teach your child the value of saving money and how to manage it. Whether you use real money with your middle schooler or play money with your first grader, the importance of being financially responsible can never be overstated.