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Financial Literacy for Kids

Here are some great ways to teach your children about money.

1. Make a Wish List with Your Children

An essential part of financial literacy is creating a set of priorities. We can’t have everything we want all at once, but we can achieve our goals over time if we plan ahead. This is a great lesson children can learn. Sit down with your children and have them list five things they want. Then have them rank them from most important to least important. Once the list is created, strategize with your children on how they can obtain their goals.

2. Teach While You Shop

Take your children shopping and actively explain your decision-making process. When you arrive at the store, tell your children how much money you have to spend and what your priorities are. Show them why you are picking one item over another and explain things like discounts and coupons. Children will learn from your example. Telling them about budgeting is important, but it’s much more impactful if they see you following a budget yourself.

3. Give an Allowance

Giving an allowance gives children first-hand experience with money. They learn the rewards of budgeting and the risks of impulsive spending decisions. Children also appreciate the ability to make decisions with their funds (empowerment!). If you’re wondering how much allowance to give, know there aren’t strict guidelines. Some parents choose to give one dollar for each year of a child’s age, while other parents base their kids’ allowance on work they do around the house. Others have a star chart with goals and when the goals are achieved, the children are given a set dollar amount. There is no right or wrong way on the allowance dollar amount. What’s important is the budgeting process of the allowance can enhance your kids’ money managing skills.

4. Split Money into Categories

Get a few piggy banks that allows your children to split their money into different goals such as spending, saving, and giving. Teach your children about each goal and how they are in control of how they use the funds. Speak with them regarding their budgeting method and thought process; this helps your children identify their goals! Additionally, talk about the charitable causes your children find important, and donate the funds in your kids’ name when they hit the goal.

5. Involve Your Kids in Major Purchases

Deciding where to go on vacation? Buying a new appliance? Include your children in the process to show them the factors that go into making a financial decision. Also, they will feel empowered to know that they helped with the research to make the best decision as a family.
In short, teaching children about finances can be easier than it might appear. It takes a bit of planning, a bit of patience, and some creativity. Once your children learn the basics of finances, you can increase their financial responsibilities and open a savings and checking account for them. These lessons will help your children develop a healthy attitude toward money as they grow into adults.

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