Today, the financial world is digitized as more and more consumers use credit cards, virtual wallets, and mobile devices to make everyday transactions. It becomes hard for some people to understand their limits. It is something I find to be a problem, especially for children of young age, as they are learning about behavior, boundaries, control, and consequences.
To make the lessons tangible, my suggestion is to slowly start with real money and work your kids into the online world. You know your kids best, and you are the best at determining when they will be ready for these lessons.
Start by explaining to your kids about the basic terminology to start practicing with money. You should cover:
- Spend,
- Save,
- and Give
- Savings Goal
- Needs and Wants
To put in practice the concepts you have explained, I will suggest grabbing three mason jars, and label them as “Spend, Save and Give.” Now that you have gone over the concepts work with your kids to set up a Saving goal that you can review at the end of a period. I will suggest doing it monthly. “The Saving Goal” should be written down on the log and visible in the same place where you set the three mason jars. For example:
My goal is to “get a new Nintendo game.” Next to the item, I will add the cost amount. If you work with allowances, this is the time when you and your kids should establish how to split the monies. If you work with a reward system, also your kid should have the choice of where to put their money earned by the end of each day or week. At the end of the month, you should revisit how much they have where and how far the goal is. This exercise will help provide some perspective.
Lastly, going through an exercise of wants and needs is essential to help your kid understand the difference when saving or spending money. Download the sheets here.
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