Ages 7 to 12: MONEY MAGIC!
Experts say this is the age group where most money lessons are learned, as a result, it’s also the optimal time to help teach your kids about saving, budgeting and smart spending.
Keep in mind, however, that your kids will learn more at this age than simply the practical ways to save and spend. Perhaps the biggest lesson they will learn is whether or not to be afraid of money.
For instance, if your child asks you a money question, how do you answer? And before you answer, consider how difficult some of these questions can be. For instance, how would you answer your child if they asked:
- Why don’t we own a cottage?
- Why is our house so small?
- Or, are we rich?
As adults, we know that these are complex questions with multi-faceted answers. We also know there’s a good chance your child won’t understand all the factors involved. But the way you answer is just as important as what you say.
If you choose to provide a thoughtful answer, rather than a dismissive response, the real lesson you teach your child is that money isn’t taboo or something to be hidden or kept secret. Experts agree this approach leads to better money management and decision making for kids and adults, alike.
- Open a savings account. Allow them to take charge of when to deposit and withdraw their money.
- Consider setting some longer-term savings goals. For younger kids, consider a savings goal that lasts three to six months. For older kids, extend that time to 12 months. The idea is to reinforce that idea of delayed gratification (saving leads to bigger rewards).
- Start by showing your kids your household budget. Show them re-occurring bills and explain the difference between necessary expenses and disposable income expenses (ie: rent versus a chai latte budget).
- Discuss ways to save money. For instance, show them a grocery flyer that has a sale on the bread they like. Explain how the sale will let you buy more without going over budget.
- Consider bringing your child into the budgeting decisions. Perhaps you can stop packing their school lunches for them. Instead, make it a team effort or let them do it themselves, but make sure they are responsible for planning out their meals and budgeting the cost of the items they want. Or you could stop buying their clothes and offer them a set budget. They would then be responsible for buying the attire they desire but they’d have to stick within the budget. Another option is to provide an annual birthday gift budget. Your child is then responsible for budgeting and buying birthday gifts for friends and family throughout the year.