6 Things Parents Should Teach Their Kids About Money
Lesson 1: The value of hard work
Being a homeschooler or parent, you know about hard work! Instil in your kids a strong work ethic and demonstrate the benefits of effort and dedication. Here are 3 practical ways to teach this:
Lead by example: Your children learn from you. Set routines, strive towards goals, and show persistence despite obstacles.
Encourage responsibility & independence: Assign your kids chores (e.g. cleaning, laundry, household tasks). They will develop pride and a sense of accomplishment by making an effort to complete tasks.
Provide opportunities for work experience: Expose them to diverse work experiences (summer jobs, volunteering, internships). This will help them experience responsibility, accountability, and workplace success.
Additionally, recognizing and rewarding your kids' hard work with positive reinforcement, financial incentives, or celebrations of achievement is essential to sustain their pride and motivation.
Lesson 2: The importance of saving
Teach them the importance of saving so they have money for things they want in the future and a backstop if things don’t plan out as expected. Encourage them to save a portion of their income and avoid overspending on unnecessary items. Here are 3 practical ways to teach it:
Lead by example: Show your children how you save and budget. Your children will understand the importance of saving when they see you doing it.
Distinguish between needs and wants: Help them understand which expenditure is necessary and which is a ‘like to have’.
Encourage savings: Set up a savings account for your children and encourage regular deposits. Explain how interest can grow their savings and motivate them to save for specific goals.
Lesson 3: The power of compound interest
Compound interest grows money over time without having to work for it. Here are 3 practical ways to teach it:
Explain using practical examples like retirement savings and your children's savings accounts. Show interest accumulation and its impact on the final amount. You can use online savings calculators to do this.
Teach with a game: Create a fun game where your kids have a pretend bank account. They deposit a certain amount monthly and calculate the interest earned and total amount after a period.
Invest in a savings bond: Buy savings bonds to show your kids how bonds grow and interest compounds over time.
Lesson 4: The dangers of debt
Debt and ignorance or mis-use of it can lead to financial struggles. This includes the importance of managing credit and avoiding overusing credit cards. Here are 3 practical ways to teach this:
Lend your children money and charge them 1% interest every day they are late repaying it.
Don’t pay off your credit card for one month and show your children the interest that is charged.
Share stories of people your children know who have struggled with debt or lost possessions due to debt, to show the consequences. Discuss about people they know who have managed their finances responsibly and have financial stability, to highlight positive examples.
Lesson 5: The importance of giving back
Teach your children the importance of giving back to their community and how it positively impacts others. This includes charitable giving and helping those in need. Here are 3 practical ways to teach it:
Lead by example: Volunteer, donate to charity, or help others in the community. Your children will understand the value of giving when they see you doing it.
Encourage your kids to do community service: Involve your kids in projects like cleaning a park, visiting a nursing home, or fundraising for a cause.
Discuss giving's importance: Have honest conversations with your kids or share books & movies that highlight the impact of giving, helping them understand the value of being selfless and compassionate and their ability to make a difference in others' lives.
Lesson 6: The importance of budgeting
Budgeting is the cornerstone of effective money management. This includes tracking income and expenses, setting financial goals, and avoiding overspending. Here are 3 practical ways to teach it:
1. Involve your kids in budgeting: Create a grocery list based on a budget, to make budgeting real.
2. Take it further by getting them to budget for a family holiday or a birthday celebration.
3. Using real-life examples, explain the consequences of overspending on these budgets and not having enough to pay bills or buy essentials.
In Conclusion
There is plenty your kids can learn from you about money, even if you only implement a few of the ideas above. Additionally, if you’d like a fun way for your kids to learn money management, MoneyTime’s homeschool financial literacy curriculum will help your children learn about money by making their own financial decisions within the safety of a gamified program.