When you think about finance, it’s quite possible that you are just as confused and muddled about it as I am. But leaving derivatives, securities, TALF processes and other equally dull-sounding-but-probably-highly-lucrative practices aside for one moment, there are some key principles of money that are quite easy to grasp – and that we should be teaching our children. So if you need to learn how to teach kids about finance, read on…

Teaching Kids About The Value Of Money

The concept of money must be a strange one to a young child, but it is probably the best place to start when teaching them about finance. Throughout most of their lives, kids get free stuff – and quite rightly too! However, it doesn’t hurt to introduce the concept of money and what goes into getting it. Explain how people have to work to get money to buy things while you are out shopping; get them to pay for it with your cash and recognizing the process; and when they are old enough, start giving them an allowance and explain it is a bit like being paid.

Children And Personal Allowances

Once your child has an allowance, you can start introducing concepts like prioritizing, spending and saving. Ultimately, you should let your kids make their own decisions about what they spend their own money on, but there’s nothing wrong with advising them. Get them to make a list of things that they would like to buy, and then split the list up into ‘needs’ and ‘wants’. Try and encourage them to spend on their needs, and save up for their wants each time you draw up a list, and the message will sink in slowly.

Getting Them Interested About Interest

Once they have managed to save up enough for that big toy they have wanted for the past few months, think about rewarding them. You could match what they have saved, for example, or make up the difference on the price of the toy: whatever you decide to do, they will slowly begin to realise the basic concept of saving. Of course, when they grow up and find out the typical rate of savings interest offered by banks, they are likely to shout at you, but hey; we’e just dealing with concepts here.

Teaching Your Kids About Bank Cards

Cash is one thing, but one reason why so many adolescents get into trouble when using debit or credit cards is that they simply don’t understand that it is exactly like money. It’s really important to give your kids a run through about cards before they have access to one.

Resources

Teaching Your Kids About Money – Bank of America

Teaching Children About Money – Mint

Financial education for kids – CNN

Start Teaching Your Kids About Money – Forbes’