Ways to Teach Kids the Value of Money

When my kid were old enough to understand money and as they were learning about it in school, we took them to open their very own savings accounts. Did you know that it’s never too early to start teaching your kids the skills of saving and budgeting and other money basics? As parents, the sooner we start having regular conversations about money with our children, the more effective we will be in raising financially responsible adults. This is a huge goal for both my husband and myself.

Open a savings account with each child.

Taking each child to the bank has been one of the most memorable things to them so far. They loved opening their accounts and they love keeping track of them with the statements that come to the house each month.

Keep it real when it comes to spending.

When we go out to dinner, we break down the bill and say that “Dad or Mom had to work __ # of hours to pay for this.” We always let them know exactly how much something costs and what the value is to our family in terms of money and time.

Break it down when it comes to costs.

When each child wants to buy something, we ask them to think about why they want it and what will happen once they get it home.

Set a good example.

We have savings and money market accounts. We put money into them each month and we let our children know how much we are saving. Demonstrating good financial habits for parents is key to raising financially responsible adults.

Take advantage of the teachable moments.

Trips to the grocery store, attending a sporting event, getting money from the ATM, and planning family vacations are just a few examples of opportunities for parents to reinforce financial lessons.

As a parent, I feel that we need to talk to our kids almost daily about money matters. I really want my children to understand the value of a dollar and I am determined that they will grow up to be fiscally responsible. We don’t want finances to be taboo so our children are welcome to ask us anything at any time about our finances.

MONEY FACTS FROM T. ROWE PRICE

• 69% of parents discuss their financial mistakes to teach their kids about money
• 58% of parents let their kids make bad financial decisions so that they can learn from their own mistakes
• 52% of parents think kids should have their own credit card to learn about managing money
• 58% of parents with credit cards carry a balance at least occasionally
• 61% of kids think their parents worry about money
• 82% of parents say they set a good financial example for their kids, but 72% of parents have some reluctance about talking to their kids about financial matters
• 39% of parents say they have used money to bribe their kids
• 71% of parents say they have used money as an incentive for kids
• 22% of parents want their kids to be financially independent at age 18
• 85% of parents have expectation for what type of career their children will have, but only 41% of kids have expectation about their future job
• 85% of parents expect their kids to go to college and 53% of parents regularly save for their kids to go to college

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Disclosure: I have been asked by T. Rowe Price and Scholastic Parent & Child magazine to participate in this program.