This post on teaching children money basics is sponsored by T. Rowe Price and Scholastic Parent & Child magazine. Any opinions are 100% my own.
Board games include play money. Dress-up sets include pretend dollars and coins. Toy cash registers are filled with fake money.
Where I’m going with this is that it’s never too early for teaching children money basics. The skills of saving and budgeting.
If we as parents start having regular conversations about money with our children, we will be more effective at raising financially responsible adults.
We need to talk to our kids weekly about money matters. I know it seems like a complicated topic, but it really is as simple as starting a conversation. You could ask your child if they have his or her eyes set on a new toy, how much he or she thinks it costs, and how he or she plans to save the money.
Other ideas to talk about are lunch money, allowance, regular charity donations you make, or even the savings you get on groceries. See, those conversations don’t have to be formal, sit-down talks with your kids about money; rather, frequent short money conversations throughout the week.
5 Tips For Teaching Children
You can use everyday situations to spark conversations about money. If you need some ideas, T. Rowe Price offers parents five tips for helping kids learn money basics and develop better financial habits:
1) Take advantage of everyday teachable money moments
Trips to the grocery store, attending a sporting event, getting money from the ATM, and planning family vacations are just a few examples of opportunities for parents to reinforce financial lessons.
2) Set a good example
In order to help their kids learn, parents should not only teach the core financial concepts but also demonstrate good financial habits.
3) Help your kids set specific savings goals
Parents can help their children set short- and long-term savings goals that provide an incentive to save, while also helping them make smarter spending decisions that leave more money available for saving.
4) Don’t be afraid to talk openly about finances
Although parents don’t have to reveal everything, openly discussing family finances will make it more likely that kids will learn and share financial lessons—and help them understand that the topic of money is not taboo.
5) Keep it fun
Find ways to keep the conversations interesting at any child’s age.
Check out the results of a recent T. Rowe Price 2015 Parents, Kids & Money survey. It revealed that parents’ behaviors are often at odds with their concerns about setting a good financial example for their kids. Based off the survey, they found the following:
Parents Want Kids to Learn About Money the Hard Way
- Learn from my mistakes: 69% of parents discuss their financial mistakes to teach their kids about money.
- Let kids make mistakes: 58% of parents let their kids make their own bad financial decisions so that they can learn from their own mistakes.
- Using credit cards and student loans as teaching tools: 52% of parents believe that their kids should have their own credit cards to learn about managing money, and 61% think it’s important for kids to have their own student loans so that they can learn about debt and responsibility.
- But kids aren’t ready for the responsibility it brings: Only 21% of kids feel knowledgeable about credit cards and only 19% of kids feel knowledgeable about student loan debt
Good role models?
- Parents want to set a good example for their kids and think that they are: 69% of parents are concerned with setting a good financial example for their kids and 82% of parents feel they currently are setting a good financial example for their kids.
- But their actions don’t reflect it: 68% of parents admitted to doing at least one of the following negative actions: lying about money, taking money from their kids piggy bank, saying they can’t afford something when they can, and using a ‘do as I say, not as I do’ mentality when teaching kids.
- Kids pick up on the bad actions: 68% of kids suspect their parents have told them they can’t afford something when they really can. And 40% of kids feel their parents use the ‘do as I say, not as I do’ mentality when teaching them. 28% of kids know their parents take money from their piggy bank.
What ways do you teach your children money basics?
*This is a sponsored post. Any opinions are 100% my own.