Managing money and building savings are some of the essential life skills you can have. These skills can help you navigate through life, save up for emergencies, and have some financial security. Unfortunately, most people reach adulthood without any finance management skills. They’re forced to learn on the go, which can lead to poor financial security and a great deal of stress. That’s why it is important for parents to teach money management for kids.
Teaching Kids About Money An Age By Age Guide
Money is a complicated concept,and most parents don’t like to discuss it with their kids. However, experts have noticed that even teaching preschools about money can have long-term benefits. If you start early, your child has a higher chance of becoming a financially responsible adult:
1. Start at 3-5 Years of Age – Understanding Spending and Saving
Research conducted by the University of Cambridge suggests that children as young as three-years-old can grasp complex concepts like spending and saving. This is a great age to teach children the concept of delayed gratification. You can teach them that they need to wait to get some time before they can get their desired toy or treat.
For example, if your child has been eying a fairly expensive toy and you’re inclined to buy it for them, make them wait until a special occasion like birthday or Christmas for it. Let them know they will get the toy, but they need to wait until it is the right time to spend the money. Its also the time to look for tips on how to teach your child to count money. Help them understand the difference between dollars, cents, and other values.
2. Ages 6 to 10 – How To Teach Your Child The Value Of Money
At this stage, you need to help them understand the value of money. Make sure they know this is a finite resource and you work hard to earn it. The best way to teach them the value of money is to let them have some hands-on experience with it. For example, give your child $5 when you’re in the supermarket and tell them they can buy anything they want within that budget. Make sure you don’t buy anything but the essentials with your own money so they understand they can’t get everything they want.
This forces children to make decisions and consider their purchases carefully. They understand the value of the $5 better and will eventually start to save the money you give them for larger purchases. For example, if you give them $5 on every trip and your child wants a $30 game, they will know they have to wait for at least six trips before they can afford the game. This teaches them delayed gratification and the value of money at the same time.
3. Ages 11 to 13 – Teaching Students About Money
Children can now understand more complex concepts like long-term savings and compound interest. You can teach them how money earns money if you keep it in the bank long enough and save consistently. It is a good idea to show how this works in numbers instead of explaining the concept.
Some websites or apps can help kids understand this concept well. Kids can calculate their savings and interests on these platforms to understand how the concept works. It is also a good idea to help children establish long-term goals for their money. For example, if your child wants a new phone, you can introduce the concept of saving money for it. Most children won’t have enough money to buy a new phone, but you can give them a target and cover the additional cost after the child reaches the target.
4. Ages 14 to 18 -How To Explain Money To A Child in Their Late Teens
Children between 14-18 years of age have better comprehension abilities and are more likely to grasp complex financial problems. However, they’re also independent and impulsive in their spending, which makes teaching them how to be financially responsible even more challenging.
The best way to direct them is to help them set up large goals like a laptop or a vehicle. Large purchases can be a challenge for young students but helping them plan for large expenses and essential devices can teach them financial responsibility. You also need to teach them about credit cards before they’re old enough to have one. A credit card is a big responsibility. It is easy to go overboard and spend more than you can pay back.
If you want to know more about resources for teaching kids about money or Kiddie Kredit, don’t hesitate to contact us today. You can also download our app and try it out to see if it suits your requirements.