Tips to Teach Your Kids About Earning, Saving and Spending Money

Ed note: Whether your child is 5 or 15, there are things you could be discussing about money. Stumped as to what to talk about? Jeannette Kaplun has a few great ideas for every age and stage. Leer en español.

Money is often a difficult topic to talk about, especially with our children. However, it’s essential to teach your kids about earning, saving and spending money. As parents, one of our jobs is to empower our children to make the best possible decisions, especially when it comes to their finances.

I started teaching my kids about saving money when they entered kindergarten. It’s been a constant work in progress, because when they are young, you need to make it fun. Now that they are older, they are beginning to understand delayed gratification a bit more, which is key when grasping the importance of saving up for something you want or need.

With credit cards, it is hard for them to grasp the value of money, since it has become less tangible. So, whenever they have a birthday, I try to swap the gift cards they receive for cash. This helps them realize how it all adds up. For younger children, this is also a great way of teaching basic math concepts. For older kids, it helps to visualize how the value of each gift adds up. You can also have them choose the gifts they want and save up for them.

Here are my top three tips for talking about money with your kids:

• Explain the difference between wanting and needing something. This distinction is very important, especially with younger children.
• Play games that involve counting money, acquiring things and saving to buy something. Monopoly is not only a classic board game. It also teaches your kids about money management in a fun way.
• Make a family savings project. Fill a piggy bank or empty jar with loose change and at the end of the year you can convert it to cash.

Now that my kids are tweens, I enlist their help for certain chores (not the regular ones, but rather specific things that require extra effort) and offer them a small amount of money. This also helps them grasp the concept of earning money in exchange for hard work. They feel proud of those hard-earned dollars, and then I allow them to spend them however they see fit.

Earning and saving money can be especially empowering for children, but we need to guide them so they understand that you cannot spend money you don’t have if you want to be successful financially. It’s a lesson that’s best to learn early on in life rather when you are an adult.