Bob Veres, from Inside Information, shares some ideas on how we can better educate our children on the concept and uses of money in today’s world starting at a young age. While this may not be currently applicable to you, Bob outlines an age-appropriate curriculum for developing money mastery in your children that may come in handy some day.
Ages 6-10
Introduce your children to coins first. Explain the value of coins in terms they can understand–how many are required to buy simple things like gum or a candy bar at the store. Help them learn to make change and convert one kind of coins into others. Begin giving your children an allowance, and as time goes on, draw an ever-clearer link between chores and allowance. Children will quickly learn the link between work and earnings as their weekly stipend is earned rather than doled out. Encourage your children to save some or all of their allowance in a piggy bank or designated savings spot. They’ll begin to see how the coins accumulate, and how the savings process can eventually deliver enough of them to buy something they might desire. This is the essence of savings.
Ages 11-13
As your children reach middle school age, you can start to increase their responsibilities–to help them learn by doing. Start to make your children responsible for paying, out of their allowance. This can help them create a budget that allows them to save if they buy wisely. Teach your children the value of long-term savings by helping them open a savings account to accumulate money for future needs. You might also consider using cash for your purchases when you go out with your children. They aren’t going to learn very much about money if they see you paying for everything with that magic piece of plastic.
Age 14-17
Your high school-age (pre-college-age) children will soon need to function on their own financially, so consider these finishing touches. Help your children set up a checking account, so they can get familiar with staying on top of their account balance and pay their expenses by check. As they consider expenses, explain how debt works and how credit cards are a form of borrowing money, not a form of free money. Use their summer job paycheck, to explain taxes and withholdings on your regular earnings. Encourage children to develop habits of dividing after-tax money earned between savings, spending, and other such as charitable donations.
There’s more, of course, that you could teach to your children as they grow up. But if your children manage to graduate from this money mastery program, they’ll be far better prepared for the real world of money than you probably were. And they’ll be far more likely to succeed financially than the vast majority if not all of their peers, who will enter college with only a dim idea of what a checkbook or budget is.