Each year I supplement my grandchildren’s financial education with a one week day camp I call Grandma Rie’s Money Camp. This year I am spending several days in July preparing for that one week of camp in August. I will research concepts to teach, find games, movies and books to teach the concepts, plan each camp day to include activities and learning experiences and pull together all of the resources into a week long camp – which will hopefully be fun and educational for both kids. I spend quite a bit of time on this, because I think it is important and because I enjoy planning it. But, what if you don’t have the time or resources to do the same?
How can you teach your children and grandchildren about money if you don’t have the time or resources to hold your own money camp or send your kids or grandkids to a fee based one?
How to teach children about money.
Here are my suggestions on how to teach about money – especially how to teach young children about money. These are things my spouse and I did – almost without forethought – and certainly without a great deal of money or concentrated time.
The trick (in my opinion) is to develop and present a focused message – that you maintain consistently from babyhood through childhood through teen years, young adulthood and yes even into their adult years. The delivery and complexity of the message changes over time, but the message itself is consistent. The message conveys the knowledge and tools to deal with money and finances but more importantly, it also conveys your own values and matches your financial and life goals. Each adult within the household or family is expected to convey that consistent message to the children.
Once you have this, every day and every activity can present opportunities to teach the message – even if you are not aware that you are teaching. Monkey see, monkey do!
Teach them the money mechanics.
Help them learn how to count it, what the value of currency and coin is, how it is used by your family and society. Teach them how and where to save it, give it and spend it, when to use it for needs vs. wants, how to make it grow and etc. Make sure they understand the different forms money can take such as cash, checks, credit, debit, electronic, and barter.
As they grow older, make sure they understand the economic principles behind it, the laws that govern it, the people that have careers concerning it – such as brokers, traders, and accountants, etc. Share with them how to deal with all of these people and why they might want to do so.
Talk about and demonstrate your money values each and every day or week.
Help them learn that you feel it is important (for instance) to not freeload, to earn your own way. Help them learn that you feel (for instance) that is is beneficial to share with others less fortunate or give to a cause you (or they) feel is significant. Help them to learn how to get the proper value for their money and, how they can avoid the ‘bad’ guys who try to scam money from people.
Teach and show them that money can grow by itself, or get used up needlessly.
Help them understand that money can earn interest, or that things money buys can grow in value. Contrast the use of money earning interest with money spent on wasteful items and let them make their own mistakes early in life – being sure your child can see that it was a mistake and showing them a better way. Let them discover (over and over) the value of compound interest. Create charts showing how much x grows at y% in z years. Pay them interest on their money, teach them about stocks, bonds and mutual funds. Show them the value of a business – especially one with passive income.
Make money available to them through their own efforts.
Whether it be through an allowance, saving up birthday or Christmas gifts, or by helping them find jobs to do for pay or small businesses they can run – make sure that your child has access to money. Once they do, use their money to teach them about saving, spending and giving. But let them decide how to allocate their money – it is their money and making decisions and living with the consequences of those decisions is one of the very best ways anyone can learn anything!
Help them find an institution to store their money and help it grow – at first that will be a piggy bank at home where you might pay interest on what they save, then perhaps a savings account at a local bank, later perhaps an account at an online bank or mutual fund. Expose them to the institutions, laws and processes used by our society to handle money.
Help them learn how to shop wisely and to learn how to delay their gratification. Watch and review advertisements with them. Demonstrate and teach that social pressure by peers (yours and theirs) should not determine how they spend money.
Show them how to track income and expenses and budget for needed or desired items.
Start by using teaching moments at the grocery or toy store. Show them the price, have them compare price and features, show them how to do more research. Demonstrate that you plan your purchases by having them help you draw up your grocery list. Show them how your household budget works by sharing bill paying and expense planning and tracking activities with them.
Help them learn how to be an entrepreneur.
Encourage and teach them to set up a kid business. They will learn by doing – about cash flow, income, expenses, advertising, marketing, packaging, quality, customer satisfaction, responsibility and all kinds of business concepts that will come in handy for them as adults.
Show them the business model for those who are lenders.
Let them see that the lender is in business to make a profit and that when they get a loan, they are the one that is supplying that profit. Help them understand that credit is just a tool but one that must be used wisely. You have to teach kids that credit cards are NOT free money and to handle them with care.
Be open to discussing personal finances with them at age appropriate levels.
It has been said that money is the last taboo subject. Don’t let it be that at your house. Have frequent family discussions where kids feel safe and free to learn about their money and yes, even about your money.
My kids do a great job of teaching my grandchildren – about all things, including money. But it never hurts to have help as long as you are all pulling in the same direction, with the same message.
Disclaimer: I have used or experienced each of these money teaching ideas and have done well with them BUT I’m not a teacher or a financial adviser or any other professional (other than a project management professional) – so use what works for you.
What did your parents do to teach you about money and finances? Are you doing the same, or something different with your children?
This is an area I worry about, because there is so much morality in money that it is easy to mess up. Teaching one lesson also teaches another on the flipside. I was always taught to be frugal, buy at garage sales, thrift stores, etc. I don’t always do that as an adult. (Like the new logo btw)
That is very true, which is why I think couples really need to figure out their money history, personality and values so they can agree on the money message for their kids.
This is excellent resource you put up, it could be award winning writeup. Promote this
Wow, that is high praise! Thanks so much.
I love the camp idea, although I’m not certain my daughter is quite old enough to really understand money. She is catching on and I try to led her the best I can.
My only concern, and I believe that John was getting at this, is that money is nuanced. I’m wondering what laws are universal and can be safely simplified without leading them away from other viable financial decisions.
I think saving and investing are definitely laws of good financial practice. However, debt it dangerous, but not always bad. Spending is dangerous and not always bad.
Have you found a way to deal with these more complicated topics?
Thanks for bringing those points up Jeff. I did come down hard on debt because our personal values are very much against being in debt. As I stressed at the top, I think the very first things parents should do is examine and agree on their money values – all other lessons flow from that. Speaking strictly to debt and spending – yes not all of it is is bad. In fact they are neither bad or good – they are just ways to use money. I would show the child, at age appropriate levels, all of the uses for money, then show and tell my child how we have dealt with each use and why and what others have done with that use that is different than what we did.
And what are your ideas for age-appropriateness for all this? My daughter is almost 4 – what lessons can I be teaching her now? In a year from now?
Elizabeth,
My granddaughter is 4 going on 5. Based on the research I did, kids that age may be ready to start being able to recognize and identify the different coins and currency. They probably can understand that you can trade money to get services and things.
My grand daughter had a blast last year at my money camp. She listened to money counting songs (with Sesame street characters), helped with the car wash we did (at their house with just my car and the parent’s cars) to earn money and she just loved the pretend store we did – using play money and their toys to set up a store and then go ‘shopping’ in the store.
I have a spreadsheet with the research I did on personal finance educational concepts from a few of the states – if you like. Shoot me an email to marie@familymoneyvalues.com if you want a copy.
That said, you know your daughter and what she is capable of and you know your own money values – so any information I give or you get from other sources I would filter through your own judgement as to whether or not to use it with your daughter!
This is so creative and fun. Totally trumps my money lessons for my daughter when she was growing up
. Have you considered packaging and selling to other parents and grandparents? (love the new site design)
Barbara,
Actually it trumps the money lessons for my sons while they were growing up (I didn’t really even give them many formal lessons about finances – they just watched what we did for the most part).
Jai did a great job on the logo don’t you think?
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