Financial literacy is one of the most important skills you can teach your child. But between sports, activities, homework and social lives, it can be tough to fit it all in.
Make the most of your time with these five tips to help them learn and get comfortable managing money.
It’s always the right time to help your kids master money!
1. Give Them An Allowance
Your child has to have money to learn how to manage it! Children love the empowerment and independence of having a bit of cash too, which is an added bonus.
Try starting with a dollar amount equal to their age; $5 a week for your five-year-old and so on. A mixture of coins and bills help them touch and understand value, as opposed to digital currency. That step can come later. Encourage them to set aside some of their cash each week and divide their haul into savings and spending.
2. Set Savings Goals
Helping your child plan and save for tomorrow includes teaching them about impulse spending, budgeting and successful money management. A helpful way to start is by having your child save their own money for something on their wishlist.
- Help them count out how many weeks they’ll need to save for what they want.
- Change the dollar amount they save each week, you can show them how to slow down or speed up their savings – and their proximity for earning their reward!
- Try using a classic piggy bank or jar. It’s a great way to have them “deposit” their savings, and a clear container can help with motivation as it grows every week.
3. Help Them Understand Value
The concept of value is tricky for young children. Talking through potential purchases can help. Let’s say your child wants to spend their money on candy and a toy. By reminding them that they have candy already at home, but they don’t have that particular toy, you can help them figure out how to best spend their savings.
Or you can mention the many toys already at home, while three packs of candy can be enjoyed over several days and shared with friends. Conversely, you could remind them that candy only lasts for a few days, where toys can be played with for much longer.
4. Give Them Chances to Earn More Money
Financial incentives work at all ages! If your child is determined to save for a big-ticket item, consider offering them a chance to earn some more money. Let’s say they’re already expected to do chores. They could generate new earning opportunities to work above and beyond what they usually do.
5. Make It Fun
Some board games like Monopoly give kids a chance to learn how to manage their money while reinforcing basic math skills. A few trips past boardwalk will quickly teach children what they can afford to buy, while budgeting a bit of a reserve for when they land on opponent properties and have to pay rent. Other games with a bartering focus can also help teach valuation and how to trade items with different values to their advantage.
Embark is Canada’s education savings and planning company. The organization aims to help families and students along their post-secondary journeys, giving them innovative tools and advice to take hold of their bright futures and succeed.