There are so many lessons that I aspire to teach my children. Some as simple as sharing, or saying please. Others more complicated that I hope not to discuss for a couple more years. Learning about money and how it works in our life and in the world is near the top of the “important lessons to teach before adulthood” list. Generally, my husband and I are laid back parents, but without some planning, opportunities to teach these lessons can slip through the cracks. Here are 8 lessons we are focusing on with our 4-year-old. 8 Ways to Teach Kids About Money.
Lesson 1 – What is Money? My husband and I talk about money and finances almost daily. It’s usually casual, maybe about the days expenses or larger investment plans. Our girls hear us talk and Little Lady has started to chime in. Before we can expect her to understand what we are talking about we need to start with the basics. She has a nice little coin collection, some current currency, soe old, and some foreign. We talk about what each is worth and equate it to what she could purchase. She is starting to have a good understanding of what she can do with a dollar.
Lesson 2 – How does our family earn money? With an understanding of what money is we can teach Little Lady how our family earns it. In our case Daddy goes to work and Mommy does a few smaller jobs from home. She knows that Daddy earns a paycheck to support us, and to allow me to be home with her and her sister all day. She knows that I sell things on Etsy to customers and earn money. Little Lady has done some modeling and receives a paycheck for her work. We take her check to the bank together and talk about what she can do with her money.
Lesson 3 – Where does our money go? Little Lady knows where our family’s money comes from, she also needs to have an understanding of where our money goes. We talk big picture with her. Each month we must pay for our needs; our house, our food, our heat and lights. We also must pay for the things we want, like TV or toys. This is a work in progress. There is always temptation; a new doll or dress or whatever she may see in the store. We have an ongoing conversation of where our money goes and how best to use it.
Lesson 4 – Why do we save money vs. spending it right away? To a young child, saving for the future is a tough concept to understand. Their life is in the here and now. We have touched on this subject by talking about things we may want to do as a family down the road like a vacation. We would need money for this vacation so we take a little each month and put it in a savings account. Little Lady has a piggy bank and when she gets money from a birthday or a generous Grandparent she puts most of it in her piggy bank. Some goes into her purse so she can spend it if she chooses. Her Piggy Bank is a place to save money for something special or important down the road.
Lesson 5 – How does a bank work? I didn’t think to talk to Little Lady about this until last summer. She was 3 and we were depositing one of her checks into her savings account. She was not happy to part with her hard-earned money. Since then we have discussed why we use a bank and why it’s important. We use the analogy of a big piggy bank, a safe place to keep our money and access it as needed. We have not yet addressed earning interest but will as she gets older.
Lesson 6 – How do credit cards work? In our house we use credit cards for everything. We do not carry credit card debt but rather take advantage of rewards cards to make the most of our every day spending. Little Lady sees us use cards far more than cash. I talk with her when we are shopping about how our cards are tied to our bank account. We can only spend what we have in the bank. That is not completely true but the concept is there. As she gets older we can talk more in depth about credit and, more importantly, how to responsibly use credit.
Lesson 7 – Tithing and charity. We attend church regularly and are blessed with some amazing Sunday School teachers. When Little Lady was 2 she was encouraged to bring an offering to church each week. This was a great opportunity for us to discuss tithing. We give every week and Little Lady knows the importance of taking a portion of what we have and giving back. She happily takes a few coins from her piggy bank each week and brings them to church. We also talk about those in our community who do not have the essentials we take for granted. This past Christmas we donated to a couple local organizations with both money and gifts. We talked a lot about giving back, it has helped put in perspective the wants vs needs of a child. She knows that not everyone is as blessed as we are and we can help if we choose to use our money smartly.
Lesson 8 – How does our community use money? This is something new we are talking about. Little Lady asked what taxes are a couple of weeks ago, tis the season for tax talk. We explained it as the money we pay to the government who in turn provides services to our community. Our taxes pay for the roads, the schools, the fire and police departments, parks and more. This lesson can grow as she gets older, for now it is a good base to learn about civic responsibility.
For a 4-year-old I think Little Lady has a decent handle on what money is, where is comes from, and the various ways our family uses it. I hope these 8 Lessons to Teach Your Kids About Money can help you start, or continue, a dialogue with your kids.
How do you talk to your kids about money?
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