An Age-by-Age Guide: How to Teach Money-Saving Tips

By: H. Davis

If you’re like most parents, you want to raise responsible children, especially when it comes to finances. But raising financially responsible children involves lots of teaching and tons of education lessons right from the start. Aside from giving them an understanding about the value of money, teaching children about finances helps them understand what the real world is like outside of their home. That’s because learning how to manage your money is a vital life skill, and it’s never too early to start teaching your children about the process. But how? This is a question many parents ask as they scratch their heads trying to find the right age-appropriate resources to use.

Sure, it’s easy to talk about budgeting and saving tips. But what about 401(k), investments, building credit, and preparing for retirement? That’s where things can get tricky. Fortunately, parents can overcome these obstacles by teaching their child about the world of finance. With that said, here’s an easy breakdown that can help you teach your child about the world of finance:

Allow Them to Use Their Own Allowance: One way you can teach your child about money is by having them use their allowance to cover their own expenses. Older children, for example, can use the allowance you give them to buy clothes, shoes, and school supplies based on their budget. Younger children, on the other hand, might prefer to buy things like candy and ice cream. Whatever the case, it’s important to educate your child on their spending habits after the fact. In other words, once your child has bought something using their allowance, make sure they understand how much they have left to spend. That’s why you need to be careful with this option to ensure that your child is spending wisely.

Letting kids pay for their own meals — whether it be breakfast or lunch — is a great way to educate them on why eating Toaster Strudels for breakfast every morning is both physically and financially unhealthy.

Be Honest With Your Child: As parents, it’s important to remember that kids are like sponges — they absorb everything. This means if you’ve been acting anxious and on edge lately, they’ll notice these sudden changes right off the back. So rather than letting them wonder why you’ve changed so much lately and spent more time at work than at home, explain — on their level — what’s going on. Inform them about the family’s current financial situation. Just remember that you’re talking to a child and not to a financial counselor. This could mean explaining to them why family vacations have to be cut back or why they might get fewer toys throughout the year.

Explain How Much Things Cost: Some parents are surprised to find out that their child doesn’t have a good understanding of how much things cost because they’ve been sheltering them all their life. Luckily, one way that will help open their eyes is by taking them on a tour. No, not around the neighborhood, but around the house. For instance, children might not understand that hot water typically costs more than cold water, since the water has to be boiled in the water heater and that involves the use of gas. They also might not know that increasing the heat on the thermostat will also increase the monthly bill. Lastly, they might not understand the risks you took buying a foreclosed home instead of buying a brand new one built just a few months ago. However, you explain to them, it all comes back to savings.

This exercise isn’t meant to scare them, it is, however, meant to help them have a better understanding of the things they overlook — like hot water, heat, and shelter. If your child is close to adulthood, then you can go as far as showing them the bills you pay and letting them see how much each one is. Show them the family’s overall cost of living and reiterate to them the areas in which they can help out.

Teach Your Child About Budgeting: Talking about ways you earn money and spend money is an excellent way to teach your child about finances — no matter their age. You can start by allowing them to help you with your groceries. That way, by the age of 10, they’ll be able to walk into a store, buy snacks or drinks for themselves, and know how to count the money for the cashier, and also know how much they’ll receive back in change. After all, cashiers make mistakes too when it comes to balancing the register.

Once they’ve mastered this step, the next step is allowing them to buy things like bread or laundry detergent. This is a valuable stage at all ages, especially since kids are more likely to know the cost of phones and sneakers but have no idea how much a gallon of milk is. In the long run, teaching your kids about the value of money won’t only help you save money on bills, it will also teach them to appreciate the valuables they have.

Thanks for the read! Did I miss anything important? What are some other techniques parents can use to teach their children about the importance of saving money? Feel free to leave a comment below.

H. Davis is passionate about K-12 education and loves exploring different ways to make learning a fun experience. If you can’t catch him the classroom, you might be able to find him at the gym, or watching football (Go Broncos!).

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