“Today well lived makes every yesterday a dream of happiness and every tomorrow a vision of hope. Look well therefore to this day.” – Francis Gray
Perhaps I’m biased, but I believe that it really is never too early to start teaching your children about good money habits. Obviously, by doing so, you are preparing them for the uncertain future. You’re also establishing a family culture, wherein money is handled with maturity and openness.
But the best news is that helping them to develop these habits can be fairly simple! I’ve put together some basic steps — many of these may not seem like rocket science, but my job is to be a coach and a goad for you to do the things which you already may “know” to do.
1) Give them an allowance — with strings.
Don’t just give them an allowance for doing nothing — this actually defeats the purpose. You can buy your young children whatever they ask for, so they don’t need “spending money”. Instead, see an allowance as a training tool: your children should learn that
money is earned by working. Believe it or not, this isn’t an obvious connection for a young child! Because a kindergartner truly is able to help with small chores around the house, you can put them to work and let them earn their allowance this way. Rather than seeing it as a “bribe”, or some sort of indentured servitude, this is a critical knowledge base for a young child.
2) The old lemonade stand.
Encourage this! And do it with adult supervision. Your child will learn how to make a product, market it and sell it. While the idea is to teach good money habits, they are also learning valuable life lessons — nothing sells itself, after all. (Though with cute kids, that’s sometimes the case!)
3) Saving and investing.
Rather than showering your young child with gift after gift, encourage them to go through the process of working towards a savings goal. You can always “supplement” this process, but having your child save up for an item will teach them that nothing comes for free. In return, children also learn that the items you buy them have real value and should be treated as such.
This might, even, cut down on those “negotiations” so familiar to parents who bring their children into stores.
4) Cold, hard cash.
A lot of children nowadays are so used to seeing parents pay with debit and credit cards that they may not know what actual money looks like! This is a new-generational issue, and it’s important that your children learn that money is more than a mouse click, or a card swipe. Show your kids the different types of money – coins, bills, etc. and tell them the monetary amount for each.
When you go shopping, let your child have a try at paying for certain items. This will help them feel quite grown up, and again — they see that transactions don’t just “happen”, they cost.
5) There’s an app for that.
I just found a great article in US News & World Report that shared 7 great iPod or smartphone apps that also provide a bunch of great lessons. Some families don’t allow their younger children access to these devices, but if you have older children in the house, you could even try some of these apps as a condition for handling the responsibility of using one of these devices. Here’s the article, and they have seven great options that they’ve vetted, ranging from free to paid (but inexpensive): http://money.usnews.com/money/personal-finance/articles/2015/06/23/7-apps-to-teach-your-kids-personal-finance-skills