Learning about money isn’t just for adults – kids can start grasping essential financial concepts early on, too. It might seem like a big task to teach younger minds how to manage finances, but when done right, it can be both fun and rewarding. Financial literacy for kids is more than just understanding how to save. It's about laying a strong foundation for making smart decisions that will follow them into adulthood.
So, how can we make learning about money something kids can actually enjoy? Let's dive into a few creative ways to teach kids the basics of spending, saving, and sharing – all while having a good time.
Before diving into the complexities of loans or credit cards, teaching kids the basics is key. Think of it like giving them the financial tools they’ll need for their future. You can do this by focusing on the three key areas: saving, spending, and sharing.
One way to make these concepts tangible is through allowance. When kids earn their own money, even if it’s just a small amount, it gives them a sense of responsibility. They can learn the importance of saving a portion for future needs, spending wisely on things they really want, and sharing with others, whether it’s a donation or helping a friend in need.
For example, let’s say a child gets $10 a week for doing chores. Instead of allowing them to spend it all, teach them to divide it. Half of it goes into savings for something bigger, a quarter for a fun purchase today, and the rest is set aside to share – maybe for a gift for a family member or a small donation. This helps kids see that money is meant for more than just quick buys. They’ll learn how to make decisions about what matters most, both now and in the future.
Money is everywhere, and kids notice it. Use everyday situations to show them how money works in the real world. For instance, when you go grocery shopping, hand them a small amount of money and ask them to help pick out items. This shows them how budgeting works in a fun way and helps them understand the value of money – “You only have $5, so how can we make the best choices?”
Involving them in small financial decisions, like planning for a trip or deciding what to buy at the store, will help them understand how choices and money are connected. And it also opens the door for important lessons about what it means to make compromises, like choosing between a toy today or saving up for something more expensive later.
One great tool for teaching kids about saving is using savings accounts. It sounds simple, but seeing money grow over time can be incredibly motivating. Kids don’t always understand why they should save unless they see the benefits for themselves. By putting money into a savings account, especially one that earns interest, they get to watch their balance grow.
For instance, many financial institutions offer savings accounts designed specifically for kids. You can set up a simple savings account where they can see their money grow month by month. The small interest they earn on their savings might not seem like much at first, but it’s a real-world lesson about how money can work for them. Over time, they’ll begin to understand how important it is to put money aside for the future.
As they watch their savings grow, they’ll also start to understand the concept of delayed gratification. For example, if they save their weekly allowance for a few months, they may have enough for something they’ve really wanted. That’s a valuable lesson that goes beyond just understanding how to save – it teaches them about the rewards that come with planning and patience.
While the idea of saving money can seem a little dry for kids, there are plenty of fun ways to make it interactive. Apps like Greenlight allow kids to have their own debit card and even earn rewards for saving. These tools are designed to let children manage their money in a safe and controlled way, giving them the power to make decisions in real time.
Another way to make financial literacy fun is by playing money-related games. Classic games like Monopoly and Life teach kids about money management in an entertaining way. While they’re playing, kids learn how to balance spending and saving, while also dealing with the occasional debt or unexpected expenses.
At home, you can also play games where they can earn money by doing chores, helping them realize the connection between work and earning. Setting goals, earning money, and then deciding how to spend or save it is a hands-on way for kids to experience real financial choices.
It’s important to talk openly about money with kids, even when it’s not a lesson. Simple conversations around the dinner table about budgeting for an upcoming family vacation or discussing why it’s important to stick to a grocery list can help kids develop a deeper understanding of how money works in the real world. As they hear you talk about saving for a goal, paying for expenses, and making decisions, they’ll begin to connect the dots themselves.
Visit First Alliance Credit Union to learn how to teach kids about money. By making it fun, relatable, and practical, you can help them build the financial confidence they’ll need as they grow older. And who knows? The lessons you teach today might just inspire them to be the smart, financially-savvy adults of tomorrow.