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Money is an important part of everyday life. As adults, we have to learn to manage our money so we are able to afford everyday staples, plus a few extra goodies. Money management isn’t something that is inherently obvious, so it’s important to teach our children how to handle it responsibly. Giving children the tools and knowledge to be responsible with money will set them up for a prosperous future!

Here are a few activities, by age, that you can do with your child to show them how to effectively manage their money!

2-5 years:

  • Making saving fun! To encourage your tot or young child to save, make it fun! Piggy Banks are a great way to do this. Dave Ramsey has the Junior Smart Saver Bank that comes in different colors and is a great teaching tool.
  • Teach them the names of coins and bills: Show and teach children how to identify different denominations of money. With bills, you can show them the different numbers, which will also help children identify numbers.
  • Have them sort change: Give your child a large pile of mixed coins, and have them sort it into different piles of the same type of coin, then identify each type.
  • *Don’t leave your toddler alone with coins, as they could be a choking hazard*

5-10 years:

  • Pay them for chores (allowance): Teach your child the value of earning income! Giving your child an allowance in exchange for chores teaches them the basics about earning money. Allow them to use that money to buy things they want, so they can reap the rewards of their labor.
  • Teach them about delayed gratification: When a child wants something, they want it now! We can’t always get what we want, right away. Just as adults have to save up for big ticket items, your child should learn how to as well. When they have their eye on a more expensive item, encourage your child to save their allowance for x amount of weeks, until they have enough money to buy it. To make it fun: create a thermometer-type chart to hang on the fridge that shows them how much money they have, and how much more they need to purchase their item. Add to it every week, so they can see their progress.
  • Open a savings account: If your child doesn’t already have one, take them down to the bank to open a savings account. Many banks have special savings accounts for children, with rewards and prizes for frequent deposits. If they get money for their birthday or Christmas, take them to the bank to deposit that money into their savings account. Make sure they go with you to the bank, to get them involved in the process and excited about saving!
  • Teach your child about charity and tithing: It is important to instill the value of giving as well as receiving. Have your child use part of their allowance to buy food to donate to a shelter, or purchase toys for underprivileged children. If you attend church, teach your child about tithing from their allowance.

10-14 years:

  • Teach them the difference between needs, wants, and wishes: Learning the difference is an important step at any age. Sure, your child may really want a new video game, but what they need is shelter, food and water. Teach them how to distinguish and value the difference.
  • Introduce them to interest rates: If they have a savings account, you can show them how their money is earning income, just by sitting in a bank. That allows them to make money, without having to work for it!
  • Warn them against advertisements: This one is tough, because we live in a world that bombards our children, from infancy, with subliminal messages geared to entice your child into wanting their product. The less you can expose your children to advertising, the better off they will be. DVRs are great, because it allows you to fast forward through commercials.

15-18 years:

  • Let them create their own budget: Once they get into high school, chances are you will give them money for lunch, and other necessities. This is a great time to teach children about a budget. At the beginning of the week, give them enough money to last throughout the week, and let them be in charge of rationing it. It may take a couple weeks for them to do it well, but this is a crucial lesson they will need when they are on their own.
  • Show them your finances: Many parents don’t want their children to see their finances, but it will help them tremendously if they can learn with a real life example. Let them see your paychecks and your bills, and how you budget. If you’re not familiar with the concept of budgeting, now is a good time to learn! Check out my post on how to setup a budget.
  • Say NO to student loans: So many teenagers are sent off to college without any idea of how dangerous student loans can be. They take out the maximum loans every semester, and are absolutely crippled by the massive burden of loans they have to pay back after graduation. Caution them heavily against taking out student loans, unless absolutely necessary. When they are a freshman in high school, encourage them to start applying for scholarships to help pay their tuition.
  • Explain the difference between credit and debit cards: When you use a credit card, you have to pay someone back. When you use a debit card, you are using your own money, from your bank account. Credit cards charge interest, debit cards do not. Teach your child to be responsible with credit. Encourage them to always pay with cash or a debit card when possible. Only borrow money when necessary, always pay bills on time, and stress the importance of living within your means.

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This post is brought to you by Andrea! Andrea is a wife to an outdoorsy and hardworking husband, mother to a rambunctious and curious 2 year old girl and has a professional background in financing. She has recently developed a passion for getting back to a natural, homemade, free-from-preservatives-and-chemicals way of life and you can read more about her journey at: www.homemadeforelle.com