Discussing money management with your children can be uncomfortable, but the pandemic compelled more parents to have conversations with their kids about financial well-being.
This data comes from an annual survey conducted by a global investment management firm T. Rowe Price which explores the relationship between parents, kids, and money and what parents are teaching kids about money.
The survey’s goal was to understand what attitudes, behaviors, and knowledge parents and kids ages 8-14 have surrounding financial literacy in the United States.
The survey also found that, overall, kids are eager to learn about money and finance.
Financial education expert and founder of the It’s a Habit company, Sam X Renick, is an advocate for teaching personal finance to kids. He states that “without a working knowledge of money, it is extraordinarily difficult to do well in life. Money is central to transacting life – day in, and day out.”
Renick suggests that teaching children about money early on will make them more informed and effective when it comes to important financial decisions in the future.
In this article, you will learn the top-five benefits of teaching your kids about money, and activities you can try to boost their understanding of the value of money.
4 Key Benefits of Teaching Kids About Money
Money affects every aspect of our lives. There is a lot of value in teaching your child about money – how to save, spend, and invest. Learning about money helps children in other areas of their lives, such as their relationships, career pursuits, and overall wellbeing.
Here are the five top benefits of teaching personal finance to kids:
- Teaches children how to set goals: Whether financial or otherwise, setting a goal is a healthy way for your child to gain more confidence and independence. When your child develops a goal, plans out the steps to get there, and can see their progress, it teaches them about dedication and perseverance.
- Sharpens decision-making skills: Managing money takes comprehensive planning, budgeting, patience, and wise spending decisions. For a child to know how to make sound financial decisions can help them feel more confident about other choices they will need to make throughout their lives.
- Teaches responsibility: When your child learns and understands how money works, they become more responsible and accountable. This isn’t only related to money, but to other people, their education, and many other areas of their life.
- Underpins the value of giving back: Teaching economy to kids isn’t just about how much your child can save; it’s also about the good they can do with their money. Giving to others can be done in many ways and opens the discussion on what causes or charities your child is interested in supporting and how they would like to do so.
Teaching Kids About Money: Activities to Try
Personal finance and economy for kids can be woven into everyday activities and isn’t something you have to structure but can naturally incorporate into your typical day. Through these activities, important lessons about money will be taught, and you and your child will have loads of fun.
Here are a few example activities that will help teach your children about money:
Establish an Allowance
The most ideal way to teach children about the value of money is to establish an allowance. An allowance instills the lesson that money is a finite resource. Your child will also draw connections between income and personal effort and how much the two correlate. It will also teach your child to spend their money carefully and purposefully.
Play a Money-Centric Board Game
PayDay is a classic board game suggested for kids who are eight years old and up. The game’s premise is centered on money management and teaches players about budgeting and how to make money last. The player with the most money at the end of the game wins.
Sign Your Child up for a Course
If you are unsure how to teach your child about money or where to even begin, signing them up for a fun, interactive course is a great option. Ivy Camps USA offers a Growing Gold: Personal Finance for Kids course led by Ivy League instructors. In this course, students will take on the role of treasure hunters to explore financial literacy concepts.
Take the Next Step
While you may be hesitant or unsure about how to teach personal finance to kids, it’s essential to teach your children healthy money habits.
Starting when your kids are young will be more informed and better equipped to manage their finances in adulthood when there is a lot more at stake.