daily money lessons for kids

​It’s amazing how many simple, day-to-day opportunities there are to discuss money management with kids. Below are examples of daily money lessons, concepts, and tools to teach kids of all ages. 

• Discuss with your children the difference between needs and wants. As basic as it sounds, many financial difficulties could be avoided if people understood that it is merely impossible to have everything you want, and that some things are more important than others.
• Teach your children how to prioritize  money decisions about saving, spending, and giving. Prioritizing can help in many day-to-day decisions, beyond those dealing specifically with money. 
• Help a child understand there is no such thing as a "free lunch". If a child wants an item, help them earn and save money to purchase it without going into "debt" to mom or dad.

Teach the value of working for money, whether by getting a job such as babysitting or a paper route, or by doing extra chores around the house.

• Include your children in the process of making a family, monthly budget. Make a list of all your income. Then ask the children to come up with a list expenses, including rent or mortgage, food, insurance, car payments, clothing, groceries, and so on. Rely on past bank or credit card statements to see how much you spent in these categories last month. Have a child find the difference between income and expenses. This monthly activity can effectively prepare a child for building his or her own budget. 
• Give all family members a personal allowance, whether tied to chores or not, to give everyone an opportunity to manage their own money, no matter how small. If your child wants to buy something not planned in the family budget, give the child the opportunity to buy it or save for it with an allowance. Remember to explain an item can be purchased with saved money, and that the money will not be available to buy anything else the child may want if the money is all spent.
• Be patient. It may take a while for children to understand that once the money is spent they cannot have anything else, but they will eventually learn—if you don’t give into cries for more money.
• Give children opportunities to practice managing money in everyday home and family life to better prepare them for “real” life. These lessons can be included in day-to-day activities and errands, and don’t need to take much time out of any schedule.
• Resist the urge to rescue your children. Stick to what you have stated about wants verses needs. This may become difficult while surrounded by other shoppers, but it will teach your children plenty about money and self-discipline, which will help them avoid unnecessary debt in the future.
• Give your children advice, but allow them to make their own decisions—good or bad. Children will learn the most from personal experience, perhaps especially mistakes.
• Saving is an important habit to begin early—early in life and early in a budget. Teach your children to pay themselves first. This means the first money to come out of a paycheck or allowance goes into savings.
• Be sure there is a goal to work toward, such as saving for a trip to Disneyland, a new bike, a college education or simply a new video game. Help the child estimate how much the goal costs, and decide how much to save each month in order to reach that goal.
• Consider having children contribute to an overall family goal. Also, consider matching savings funds as an incentive.
• While grocery shopping, show your children how to comparison shop, pointing out ways to maximize your dollar, such as reading price labels for price per ounce, or using ads and coupons to plan your menu.
• Use play money while making a budget so children can visually see how much money goes to expenses.
• Give your children the opportunity to hand money to cashiers, bank tellers, parking attendants, etc.
• When paying bills or writing out checks, show your children how to track account balances or carry a balance in the checkbook register. Share your bank, credit card, and investment statements to teach how interest works. Look for opportunities to teach money matters all around you.

Children at different ages conceptualize money matters differently. Gear money lessons around what is understood by the child, giving more responsibility to older children, but never underestimating younger children’s ability to observe your habits and attitudes toward money. Remember that another way we teach is by example—do your best to practice what you preach so your kids will have positive financial behavior to mirror. 
Click for more from the Teaching Children Money Management publication.