Tips for Teaching Children to be Money Savvy
Did you know there was a Money Savvy Pig to help you teach your children about money? Did you grow up understanding how to be money savvy? No? Me either. I did what most of us did..over spent, got into debt, and then worked like crazy to dig myself out. Fast forward several years and several children later, my husband and I started searching for ways to make sure we were teaching our children to be money savvy so they didn’t have to struggle with managing money as young adults. Here are our top tips that you may find helpful.
Start Teaching Early
How early is too early to start teaching abut money management? My thoughts are as early as when your child starts asking for things they see on the television or while shopping. Will they understand? Probably not, but they can start learning the their parents work for the money needed to buy the things they want and need.
Teach Saving and Planning
Spending everything you make is exciting. But when you do, you are limited in what you can buy based on your cash on hand (or allowance). We wanted to teach our children that you can’t and really shouldn’t always get everything you want as soon as you want it. Learning that saving and planning for purchases makes you appreciate them more (which for children means they will take better care of the items so they last longer).
Teach Responsibility of Giving
Giving to others is an important part of being a responsible adult. It has to be learned as a child. Whether it is helping someone by taking up the trash cans after pickup (this was a big thing for our little ones) or giving to a family that is suffering, compassion has to be learned by doing. Children have such caring hearts, using this time to teach the love of giving to others sets them up for a life of doing good because it is the right thing to do.
Teach Responsible Investing
Not many children will understand investing, heck, not many adults really understand the ins and outs of investing but as they grow up and you transition to a bank account, learning about interest and the stock market opens a while new world. My teens all had investment accounts and learned about stocks and bonds while their money investment was small.
How to Start
Most of us had piggy banks growing up. All our money went into the piggy bank and when it was full we broke it open and spent all the money in it. No? That’s not how it worked at your house? Yeah, mine neither. My crew could get money out of theirs any time they wanted. We encouraged them to not break the bank until it was full but that is something that comes over time and maturity.
Now we use a four compartment piggy bank by Money Savvy Generation. This new twist on the piggy bank has four sections that are labeled Save, Spend, Donate, and Invest. It also comes with stickers that can be placed as a reminder to your child what they are saving their money towards.
Each week when it is time for the little ones to cash out their job jars (we don’t do allowance, they earn money by doing extra jobs above and beyond taking care of their personal area and things); we total their earnings and then discuss how much they will be placing in each compartment.
Depending on the age of the child, it may be as simple as placing a dime or quarter into each compartment; or as complicated as them deciding on a percentage of their money to be divided up.
As they grow up and their purchasing desires start to cost more, they have to learn to budget and save for a lot of purchases. We also have an agreement that we will match their savings and investment amounts up to a certain amount each year to encourage them to take planning for the future seriously.
By starting the process of understanding money management early, our hope has been that our children grow up with the skills necessary to transition into adulthood without the financial burdens that we had to live through years ago.
What tips do you have for teaching children to be money savvy? I would love you to share them in the comment area below this post. And if you leave a comment with a tip on being money savvy; we will select one name to win a Money Savvy Pig from Money Savvy Generation. Or you can also purchase your own Money Savvy Pig at www.MoneySavvy.com or on Amazon.
Make sure you enter through the giveaway form so we have a way to contact you if you win. Good luck on your entries!
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When two of our daughters were aged 10 and 12-years-old they jointly did a newspaper route to earn their own money. Fortunately, they had a large apartment complex in their delivery area, so most of their deliveries were indoors (great for snowy day of winter & heat of summer.) They learned responsibility, the value of work as it related to the money they earned, and met a wide variety of people while they worked. They also received lots of cookies, candy and other things from older folks who appreciated their youth, enterprise and personal attention. They did save money in a piggy bank; but, it lacked the insightful 4 divisions of the MoneySavvyPig. They gave some of their money to Sunday School collections and learned to save the rest for things they wanted. And, they became more cost conscious, self confident and valued their choices more. When a young person can earn their own money it opens doors to great learning and dreams. I believe in learning through working.
When our oldest daughter left for college, she got her first credit card on her college campus. Vendors actually set up tables to lure students in to sign up & obtain credit cards from their companies! Our daughter did quite well managing her money at first. However, when she went over budget, we told her to put the card in a glass of water and freeze the card. That technique forced her to not just think about a purchase before making it; but, then she had to thaw the card out of the ice prior to using the card, which resulted in more thinking time while the ice thawed. She said it actually caused her to spend less. The numbers proved it was successful too!
When our newly married, grown kids, bought their first homes we encouraged 15 year mortgages (if financially possible) or 30 year loans with extra payments to principal when they could afford to make such payments. We told them about Amortization Charts & said it would be good to plug in numbers to see how much money early payoff could save them. They were surprised by the savings & excited to pay off their homes early (there was no prepayment penalty!) However, when my husband & I married, we were young, and the bank did all calculations based on 30 year loans. Like our folks, we never questioned the banks advice. Boy did they make lots of money off of us! We were well into our home loan’s life when we learned we could apply money to principal and pay off the loan early!
Our youngest daughter is expecting their third child in April. The other 2 daughters are 2 and 4 years old. The four-year-old would be able to use the pig and begin understanding money concepts with this pig. While she’s pretty verbal already, she also (like many children) responds well to visual cues. My tip for teens using credit cards is to have a limit for them you, the parent, and they are comfortable with. And, help them draw up a budget, so they can begin realizing they can manage what they have. Explaining that this budget will change and expand as they grow older. Thus, they realize they are the RESPONSIBLE PARTY for their money over time.
I did not grow up learning to be money savvy. I love your tips for children. For teens we discussed with our children and now with our grandchildren the value of working hard to understand concepts in school, their grades, activities in school and outside of school and the impact of those things on scholarships. Letting them know that the more scholarship money they get, the less the cost of college would be for those paying the money for education. We’ve also let them know that taxpayers help foot the bill for college education, so it’s also considered important to our countries future as well. Their jobs in the summer &/or the school year are important in helping with the costs. And, we personally, value their futures enough to have set up college funds for them. Middle School and High School students face decisions and alternatives that are complex; and, my husband & I hope to help raise their awareness so that better decisions can be made during such critical years. We both were both pretty clueless during those transitional times.
Our children are now grown and we have encouraged our oldest (tween & teen) grandchildren to save money through savings accounts.
I love that pig! My son uses different piggy banks at the moment and we take him to the bank with us to deposit his money when it has accumulated.
Make sure they deal with real cash money & understand that you have to earn that money . A lot of kids today think those little plastic cards or their phones just automatically pay for things or make money spit out of an ATM.
Let them learn from money mistakes from early on. They may want to blow their money on something and then later regret it. Allow some space for failure, so they understand the consequences before they become adults.
Wow! I’d never heard about this pig until today. A couple years ago we got our granddaughters special box sets for Spending, Saving & Donating. This addition of Invest is perfect for the girls’ growing and conceptualizing minds. And, I like that it’s a see through pig! Thanks for helping this grandma rethink money basics!
Great idea for my 10 year old son!
My husband needs this!
Oh my goodness. This is genius. I need two of them for my kids. I love that they are see through.
Making children wait a few days or weeks to buy something that they insist that they want in case they change their minds.