You can start introducing your kids to money in many different ways. Once they reach school age, start teaching them the fundamental concepts of money, then you can move onto different ideas of credit and investing.
Give Them an Allowance
When children receive an allowance, not only are they learning about basic budgeting skills, but they are also learning how to ration that money until the next allowance is paid. You can always make suggestions and educate them on the many different options on how they can spend their allowance, but let them have the final say about how they use their own money.
Allow Them to Make Mistakes
When children spend all their money at the first opportunity they see, they will learn quickly how to budget. An appreciation for saving and rationing that allowance will be developed if they don’t receive extra to use until the next payment. While you should allow them to make mistakes, be ready to step in and provide education and guidance when needed.
Use Saving and/or Investment Accounts
Opening a savings or investment account creates an easy way for kids to understand how interest works. They’ll see how saving more money will earn them more interest while also introducing them to balancing an account book. When picking a bank, make sure you do your own research. Not only should you pick an account without monthly maintenance fees or minimum balance requirements, don’t forget about location (or no location if you use an online bank) and interest rates.
Introduce Financial Goals
Discussing long-term goals and investment planning can encourage kids to think about saving for the future. Conversations about saving for college, buying a car, and charitable giving can all be introduced to give them an early start.
Help them understand that successful financial milestones are achieved through setting goals and delayed gratification, and find ways to encourage them put money aside to attain these goals. Matching savings and/or interest is another helpful implementation to encourage your kids to put away for their future.