Hey, this is Chris with Money Burst, back again to help you navigate your financial life. Today's topic is a big one. How do you talk to your kids about money? And where do you even begin?
So, let's break it down, starting with preschoolers. Kids at this age love to play and pretend, and this is a perfect time to introduce the concept of money. You can use play money to set up a pretend shop, for example, and this will help them get used to recognizing that different coins and bills have different value and understanding that items have cost. Keep your expectations low, though remember, they are still too young to really, fully grasp all of these concepts. But it is a great time to get their brains thinking about how money works.
As your kids get a bit older and make it into their elementary school years, you can start taking things up a notch. This is a great time to introduce the concept of saving. And you can do this through a simple piggy bank and an allowance to start that discussion around saving versus spending, and how the money that you save can grow over time.
By middle school kids can begin to understand the more complex concepts like budgeting and making choices between wants and needs. I want you to encourage them to save for something that they really want, and this will introduce them to the idea that it's okay to buy the things that you want, it just might take some time to save up for it. At this age they can even start contributing to the family shopping experience by giving them a small budget.
Once they reach high school, they should be ready to face the sometimes-harsh realities of our financial world. Discuss big topics like interest rates, loans and credit cards, and even the basics of investing can be introduced at this time. Some families even choose to open up a bank account for their teenager at this stage so they can have some time to, you know, try out managing money on their own.
Remember to keep in mind that with these lessons it's important to keep things age appropriate and engaging by letting them learn by doing. Being hands-on with the stuff makes it a lot easier to understand what's happening.
And remember, it's never too early to start teaching your kids about money. And with the right guidance they'll grow up to be financially prepared, and responsible, adults.