This guest post was written by Efraim Landa
Efraim Landa is a venture capitalist and an expert in the field of finance
Teaching elementary school kids about money is easy. Really. It’s teaching adults about money that’s hard. If you’re a parent, you’ll have a lot more success instructing your young school-aged children about how to manage money than you ever will teaching teenagers about it. And, once they get to college, forget it! You might as well just put a cot in the basement and let ’em have at it. Okay, that may be a bit of an exaggeration, but there is a good bit of truth in it. The truth is, when it comes to money, the earlier you begin teaching your kids about its management, the better. In fact, most financial experts agree that it’s a good idea to begin teaching your children about money as soon as they can count. Here are some of the most important and basic tips you can teach your elementary aged children about money.
- Introduce your kids to money. Show them a little about your finances… not too much (especially since you don’t want them to worry if or when money gets tight), but don’t be afraid to explain to them how you earn your money, what the difference is between your earnings and your actual paycheck, and where all your money goes.
- It’s probably something you heard your grandfather talk about often… kids today don’t know the value of a dollar. That’s why you need to teach them. Give kids a chance to earn a little money as early as first or second grade. A quarter for a chore, a dollar for another chore, etc. Then allow them to spend a little, not all, of that money they earned when they go to the store with you.
- Teach your children to wait. If you’ve got your kids earning money and spending a little at a time on something they want when they go to the store with you, don’t add money to it every time they see something they want. This is something many parents can’t seem to resist, but it does the opposite of teaching them that they have to wait to make certain purchases.
- Perhaps the most important lesson you can teach your children about money is saving. This is a concept many adults have trouble with, especially in our everything-in-an-instant world. Whenever they receive money for birthdays or Christmas or from an allowance, make a guideline or rule that they need to save at least half of it. Have your child name something they want, something that costs more than they have at the moment. Then help them make and keep a goal to save for it.
- Take your child with you to the store, preferably when you go to the grocery store. This is one of the first and best money lessons a child can experience. Everyone must shop for food and, because it’s a necessity, it’s necessary to know how it works. And, if you don’t know how money works, you won’t know how grocery shopping works. Before going to the store, have your child help you figure out what your grocery needs are currently. Make a list, and take it with you. Have your child walk with you to find items, pick out items, and check them off as you go. Add in a couple items you’d like to purchase, but end up not buying because you don’t have the cash to spend at the moment. Even if this is not the case, it’s an excellent lesson for a child to learn because it helps them to decide the value of one purchase over another.
Teaching kids about money is like teaching them anything else. The earlier you begin, the better they’ll understand. The difference, however, with teaching kids about money and a lot of other things they learn is that money management is forefront in living a successful life. Think about all the things you learned as a child, whether in school or out of it. Now, don’t you wish someone had sat you down and instructed you on the ins and outs of money management? If you had only learned such things as using a credit card wisely, how to set goals and save, what to charge and what not to charge, and all the other important lessons there are to learn about it, the road likely would have been a lot less rocky. So, teach your kids about proper money management now… and keep your basement free for your man or woman cave!