How to Raise Financially Successful Children
Many young children like to collect coins and save dollars. That does not, however, mean that they understand the concept of saving versus spending. Often they don’t even know how much money they actually have.
Kids love to save coins in a piggy bank beginning at a very young age. Loose change on a countertop doesn’t exist in this house. Although they are always certain to ask first, my kids love to divide up the coins and store them for a later date. Money tucked into cards from grandparents also has a special place.
When kids are taught lessons in finances early on, they internalize good habits when it comes to handling money down the road. It’s important to provide age appropriate lessons in finances as kids grow.
How to raise financially successful children:
While toddlers don’t understand the value of money, and will almost always pick the biggest coin when faced with a choice, they can learn the names of coins. Tracing coins and writing the number to represent the value is a great way to introduce the concept of value, and sorting them into piles and teaching the name of the coin helps them differentiate between each coin.
Playing store is a favorite toddler game, and adding play money to the mix makes the game feel like the real thing. My kids love to use empty cereal and pasta boxes and spice jars to add another element of real life to the game. Purchase a play cash register or create a cash box with homemade play money. Use stickers to mark prices on items and recycle shopping bags to collect things from the shelves.
Playing store helps toddlers understand the connection between buying and owning. You have to pay for the goods to leave the store.
Children in this age group are beginning to understand the value of money. They understand, for example, that a dime is worth more than a nickel despite its smaller size. This is a good time to take kids shopping, and help them look for and compare prices.
Have your child help you clip coupons before the shopping trip, and put your child in charge of making sure those items get into the cart. Ask your child to help you compare different prices on similar items to make choices while your shop.
Visit yard sales on weekends with coins from the piggy bank. Due to low prices on coveted items such as books and collectibles, yard sales are a shopping paradise for kids in this age group. Have your child fill a coin purse with money from the piggy bank and take your time looking through various items. Talk about the prices and show your child why they can stretch their money a bit at a yard sale versus shopping at a store.
Whether your child earns an allowance or is given money at times by generous family members, now is the time to visit the bank. Seeing how money works is powerful for little kids. Let your child join you when you visit the bank and explain the different forms as well as how the ATM machine works. Where does that money go? What is a check? And how does that credit card pay for things? These are common questions in this age group, and it’s time to solve the mystery for them!
This is also the perfect age to set up the “spend, save, donate” jars instead of shoving every coin and dollar into the piggy bank. Children in this age group want to help others, and helping them choose a cause and establish a jar to fill with coins throughout the school year can be very powerful.
Many banks will open children’s savings accounts with no fees or minimum balances. Helping your child open a bank account and making a monthly deposit from the save jar sets your child on a path toward financial success.Read More