2 Easy Ways to Teach Kids about Money

Trying to teach kids about money isn’t always easy, especially when most things are paid online or with a card. It’s hard to grasp just how much money something is when it’s just numbers being said by the cashier.

Here are two easy ways to teach kids about money.

1. Talk with your kids about where the family money comes from. Do your kids know how you and your spouse earn money? Explain to your child how work (or your time) is basically an exchange for money. You spend your time working, and in return, you get paid.

There’s a great visual using Monopoly money (or any other game with pretend money) to help your child understand how money is exchanged for different things. Pull out your board game money and count out the household income into a pile.

Then show your child where the money goes each month. How much goes toward your rent or mortgage and other housing expenses? Set that amount aside and then make another stack showing how much money goes towards utilities. Make another stack for food and then one for health expenses.

Whatever you spend money on, make sure you pull it from your income pile and create a stack for it. When all the bills are paid, is there any money left in the income pile? If so, does it go into savings or to paying down debt? If there isn’t enough money in your income pile to cover all of the monthly expenses, how do you manage to stay afloat? Are things put on a credit card?

The older your kids are, the more in-depth you can go. When they see all of the things that need to be paid for each month, they may think twice about asking for whatever new item they want at the moment.

The earlier you start talking with your kids about money, the more they’ll understand about money when it’s time for them to move out. But don’t worry if you have a teenager; it’s never too late to start the conversation.

The more you can talk about money with your child before they move out on their own, the better they’ll be prepared to handle their own finance.

2. Share why you spend your money on certain things and not others. This is a great way to share your values about money with your kids. Why do you spend money on certain things and not others? When you explain why you spend your hard-earned money on the things you do, your kids will learn about your money values.

If you value nice things, this will be evident in your home. When you look around, are you surrounded by keepsakes that remind you of certain people, trips, or other things? If so, share some of the stories behind a few of the items in your house and why you purchased them.

Or maybe you save up your money to buy the top of the line because they seem to last longer. Or do you spend the least amount of money on something even if the quality isn’t always the best to allow your money to go farther at the time?

Maybe you avoid purchasing physical things and prefer to spend your time and money on experiences. Do you feel physical things just clutter up your living space and create more work for you because you then must clean them? Whatever your reasons are, let your child know.

When you open up and talk about where your family money comes from and your values about money, you’ll not only teach your child important money lessons but also give them a better understanding of who you are.

For another way to help your child learn about money, have a Paying with Cash day.