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  • She Says

Teddy Bears Talk Money

  • IWB Post
  •  November 22, 2014


Given how important financial skills are to navigating life, it’s surprising that our schools don’t teach children about money. As a parent, however, you can teach your child important financial lessons — and you should.

To help your kids master essential money skills, use these tips from parents and top personal finance experts as your lesson plan.

1. Tie a “No” Today to a “Yes” Tomorrow

While they are still a little young for in-depth money lessons, make a point to involve them in family finances and try to make talking about financial responsibility and independence a part of your daily life. For instance, when your little one asks if you could go to a local pizza restaurant, you may say no, but go on to explain to him that it costs a lot of money for the entire family to enjoy an evening there. Remind him of your vacation in a few months and say that you are saving up so that everyone can have a lot of fun on the trip. It can be a good way to teach a kid about the important principle of delayed gratification and the lesson that sometimes you have to say ‘no’ to things you want now, to enjoy better things in the future.

2. Let Them Make Spending Mistakes

When you are out shopping, kids can bring their own money and spend it however they’d like (within reason!). Not only do they learn money management skills, but this helps prevent the ‘gimme’ attitude. If a child sees something they want and asks if you can buy it, you always respond, ‘Do you have enough money for it?’ It also gives them the chance to make money mistakes. Kids can learn valuable lessons when they purchase cheap items that break almost immediately. Then you can have great discussions on how to make wise purchases.

3. Show Them That Work is Rewarding

Chocolate is a special treat reserved for a reward. At this stage of candy talks, you can teach your child about finances with food. Kid is learning that when he uses the potty, picks up after himself, or helps you with a chore, he is paid for his work in delicious, color-coated chocolate candies. Your little one is beginning to understand that hard work is rewarded.

4. Connect Saving, Spending, and Giving From the Outset

You can use this easy activity to teach the lesson. Create three jars – each labeled “Saving,” “Spending” or “Sharing.” Every time your child receives money, whether for doing chores or from a birthday, divide the money equally among the jars. Have him or her use the spending jar for small purchases, like candy or stickers. Money in the sharing jar can go to someone you know who needs it or be used to donate to a friend’s cause. The saving jar should be for more expensive items.

5. Talk About Debt, Too

If kids want to buy something on their own, like a toy, give them three choices: 1) Buy it now, 2) Save to buy it later, or 3) Borrow money from parents. If they choose to borrow, they’ll have payment terms and interest just like a regular loan. This way they can learn the consequences of debt, both good and bad, before it has any real-world implications for them and without the lectures and scare tactics. Then they’ll have the skills and experience to make smarter choices once they’re out on their own.

6. Keeping good records of money saved, invested, or spent

To make it easy, use 12 envelopes, 1 for each month, with a larger envelope to hold all the envelopes for the year. Establish this system for each child. Encourage children to place receipts from all purchases in the envelopes and keep notes on what they do with their money.

7. When using a credit card at a restaurant, teach children about how credit cards work.

Explain to children how to verify the charges, how to calculate the tip, and how to guard against credit card fraud.

Money gives people — both young and old — decision-making opportunities. Educating, motivating, and empowering children to become regular savers and investors will enable them to keep more of the money they earn and do more with the money they spend.

Share with us your financial lessons you teach your kids on daily basis.

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