Financial Literacy Tips for Young Children
How to Help Young Children Develop Healthy Spending and Saving Habits
Instilling healthy spending and saving habits into your children from a young age is the best way to make sure they grow up to be financially responsible adults. Below are some of the most effective methods for teaching your children financial literacy.
Develop a Budgeting System
Developing a budgeting system with your child will help them learn how to save money from an early age. One of the most popular types of budgeting systems for young children involves using three jars to separate money that can be spent, money than needs to be saved and money that will be donated. This helps your child visualize their savings, spending and donations in a fun way.
Make Saving Fun with Games, Rewards and Incentives
In order to motivate your child to save money, you will need to provide them with fun incentives and rewards. When you make the process of saving money a fun game for your child, they will be motivated to continue saving and meet their goals. Using a goal chart is one of the best ways to keep your child motivated as they work towards their spending goals. Additionally, rewarding your child for making smart purchases or playing games like Monopoly with your child will help them learn about financial responsibility in a fun and rewarding way.
Teach Your Child That Money is Earned Rather Than Given
Raising a financially literate child involves more than just teaching them how to budget and save for large purchases; you have to make sure they understand that money is earned. Explain to your child that people go to work in order to make money and pay for things like housing, food, clothes and fun activities. Another way to help your child understand the value of money is to have them complete household chores in exchange for an allowance. You could even create a tiered system where bigger tasks are worth a larger allowance than smaller tasks.
Set a Good Example
One of the best ways to encourage your child to practice responsible financial habits is to practice them yourself. Showing your child what responsible saving, spending and budgeting looks like will give them a framework for making good decisions with their money later on in life.
It is never too early to begin teaching your child about the value of budgeting, saving and spending responsibly. If your child learns how to be responsible with their money from a young age, they will know how to make healthy financial decisions throughout their entire life.