- 5 Lessons to Teach Your Kids Financial Literacy at Home
5 Lessons to Teach Your Kids Financial Literacy at Home
April is National Financial Literacy Month and while it might look a little different than normal, we are still dedicated to helping young people in our communities develop money management skills and smart spending habits. Instead of visiting schools, we have put together fun activities to help you teach financial literacy at home. Don’t worry, teaching these lessons doesn’t require a special degree but rather starts with the basics. We’ve provided all the tips and tools to get you started.
1. Understand Wants vs. Needs
Being able to determine what is necessary to have compared to what is nice to have is the baseline of making good financial decisions. As a family, you likely spend your money on needs such as food, shelter and medicine. While the nice to have expenses, like toys and vacations, come after those needs have been met. Demonstrating this type of behavior with your kids will help them make their own financial decisions in the future.
2. Show Opportunity Cost on Purchases
Kids should learn money isn’t unlimited. Showing opportunity cost simply means explaining that money used to purchase an item won’t be available to use to purchase another item. For example, when shopping for groceries, even online, kids can be asked to choose between two different kinds of crackers. Explain that there is not room in the budget for both.
3. Display How Money Grows Over Time
Using a piggy bank to save money is a great idea but may not give kids the best visual. Consider using a clear jar to collect your kids’ savings so they can see the money grow. For example, yesterday they had a dollar bill and two quarters. Today, they could have a dollar bill, two quarters and 5 dimes! Get them excited about the money growing!
4. Make Smart Money Choices
To go along with the savings jar, consider creating two other jars: one for spending and another for sharing. Every time your kid receives money, either from chores or as a gift, have him or her divide the money equally among the jars. The spending jar can be used for small items like stickers or gum. The sharing jar should be used for donations or charity.
5. Teach Patience and Instill a Habit of Saving
Encourage your kids to save regularly and explain that expensive purchases may require waiting until there is enough money. Monitor their savings and talk to your kids about goals for using their money. Use short, simple messages to encourage them:
- Saving is a great habit.
- I love to save.
- It feels good to save money and build my future.
Every time they add to their savings, help count how much there is and talk about how much more is needed to reach the goal.
Taking advantage of teachable everyday money moments can help kids grow to be mindful consumers, savers and givers. Download our full Making Life Great at Home packet for more financial literacy fun!
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