Tips for Teaching Kids about Money
Laura Edgar is a senior writer for NerdWallet.com, an unbiased personal finance website committed to promoting financial literacy.
Money management is one of the most important life skills you can pass on to your children. Once they’re old enough to manage their own money, they’re more likely to use it wisely if they already have good spending habits to fall back on. Study after study confirms it! That said, it’s not always easy to know how to approach the subject. Here are some great strategies to make your next money conversation easier.
Keep the conversation fun
Kids love money. Don’t worry about the conversation being “too boring”. Money is only boring when you frame the conversation that way. Don’t say, “Let’s talk about grown-up things because it’s good for you.” That’ll bore anyone!
Before you talk about mortgages or credit cards, your kids need to understand basic money management concepts like saving, budgeting, and working with cash. With cash, kids can literally see money coming and going, which will help them internalize concepts like spending and saving.
Open a bank account
If your child is older, a savings account is a great way to introduce them to banking and encourage them to save for something big. BrightStar’s Cosmos Kids Club is a great savings program for kids 13 and under. If your child is a teenager, a checking account will help them practice managing money and paying for their own expenses.
Urge caution with credit cards and borrowing
When used correctly, credit cards and loans can help people afford good things like a car, a house, or a university education. However, people need to be really careful because too much debt is definitely bad. Credit cards and loans aren’t “free money”.Paying your bill in full each month is the best way to avoid trouble.
Keep learning together
It’s always a good idea to brush up on personal finance basics before you talk to your kid. BrightStar University has an excellent collection of games, articles and videos to improve your financial literacy at any age. Check it out and start your money conversation today.