Financial literacy, which involves positive habits like budgeting, saving, and smart spending, is incredibly important. And it’s never too early to learn. In fact, children as young as three are capable of understanding basic financial concepts. What’s also interesting is how receptive children are to learning. One study found that 53% of kids
wished their parents taught them more about money.
Here are some of the best ways to teach your kids about money so they’re equipped to make better decisions and be financially stable as adults.
Start By Setting a Good Example
Kids are like little sponges constantly soaking up information and often imitate what they see. A critical precursor to financial literacy
is laying down the right foundation by setting a good example.
If, for instance, parents have the tendency to whip out their credit card any time they see something they like and, in turn, accumulate big debt, a child is likely to follow suit. But if parents carefully consider what to spend money on and use a credit card wisely when they truly need it, that should help instill positive financial habits in their children.
This is, admittedly, easier said than done, as many adults have poor spending habits. But it’s a critical starting point. Knowing how you handle your finances can be mutually beneficial for you and your kids.
Give Kids a Piggy Bank to Teach About Money
While it may sound a little cliche, a classic piggy bank is still a highly effective way to teach kids about money. It also promotes sound financial management. Immediately blowing money as soon as it comes their way is a recipe for disaster. But teaching them to save their money
and spend it on something they really want later on (delayed gratification) sets the tone for fiscal responsibility.
This brings us to our next point.
Have Younger Kids Pay with Cash to Understand Monetary Value
In many ways, digital banking has revolutionized financial management. And while having an electronic savings account and paying with a debit card can work well for older kids (experts suggest age nine
as an absolute minimum and ideally waiting until age 15), it’s usually better for younger kids to pay with cash to learn denominations.
“By four to five years, children understand that they need to pay for merchandise,” a study by The University of Cambridge
explains, “but may not understand that coins have different values.” But if they physically count the money they’ve saved when buying something, this quickly helps them understand the monetary value while also helping with math skills.
Teach Kids How to Create a Basic Money Budget
While the budget of a 10-year-old will look dramatically different from an adult’s, it’s still something they can comprehend and benefit from. For example, if your child earned $10 a week for their allowance, they may spend a third of it on a small toy, a third on treats, and put the other third in their piggy bank to spend on something bigger later on.
In terms of the age to start, budgeting expert Jesse Mecham
suggests age eight, as they’re “old enough to understand, to learn from mistakes, and to benefit from good choices.”
Steer Them Clear of Impulse Buys
As consumers, we’re constantly being prompted to make impulse buys. Try making it through the checkout line of any grocery store or Walmart, and you can’t help but be bombarded by an endless array of candy bars and knick-knacks. It’s big business.
And while throwing an occasional Snickers bar into the grocery cart is no big deal, consistent impulse buys can be toxic for teaching kids about money. So try to keep this to a minimum.
Teach Kids to Think Long-Term with Their Money
It’s common for kids to be shortsighted when buying, which doesn’t always lead to the best decisions. One final way to teach kids about money is to help them see the big picture.
Say, for example, you have a teenager who’s saving up to buy their own smartphone. They could go with the basic purchase with a one-year manufacturer’s warranty and skip the extended warranty. But if they encountered a serious problem after that period had passed, they would either have to pay for expensive repairs out of pocket or replace it altogether.
With long-term thinking, however, they could buy extended coverage to ensure their smartphone stays protected long after the manufacturer’s warranty has ended. And as a result, they would be saving money in the long run
Upsie offers the best extended warranties for tablets
, and other electronics
. With Upsie, you gain comprehensive coverage with easy 24/7 claims that costs up to 70% less than in-store warranties. Upsie also has Smartphone Subscription Warranties
that cost just $9.99 and include complete protection. Upsie has transparent, confusion-free terms that make protecting your purchases easier than ever before. For the best protection at the best price, choose Upsie.
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