Today I want to welcome Amanda Grossman to the blog to talk about teaching kids to save money. She’s writes about money education for kids over at Money Prodigy and has a lot of practical advice for all of us interested in raising financially responsible children. Take it away, Amanda!
I don’t have to tell you that your child needs a money education. You already know that.
But how to actually start that money education? Well, that’s a different story. Let’s get started!
How To Start Teaching Kids About Money
I talk to parents all the time who feel absolutely paralyzed by how to start teaching their kids about money.
Some of the most common reasons I hear (don’t feel bad if you find yourself nodding your own head in agreement to some of these) are:
- Not knowing what your kid already knows about money, and what they don’t
- Lacking confidence in your own money skills
- You were never educated by your parents on the subject, so you haven’t seen what a money education at home looks like
- You’re afraid of your kids finding out the true state of the household finances
I want you to set aside any of the money baggage you have at the moment – including feelings of inadequacy when it comes to teaching your child about money – and instead focus on two things that will make the path forward much clearer.
Focus #1: Parent with this End Goal in Mind
I’m going to share something with you that I believe in so much, I just want to shout it from the rooftops (but since I’m a blogger? I’ll just write about it instead): you want to parent your child with the end goal in mind.
What’s the end goal of teaching your kids about money?
It’s not to make sure they can count coins, or that they know the difference between a stock and a bond (though, yes, those are helpful things to know).
You’ve got to think much bigger than just teaching your child the logistics of money.
You want to raise a child that can stand on their own two feet (aka, who is financially independent). Because – as the airline industry has taught us well about needing to put on our own oxygen masks first before we can help someone else – once your child can financially take care of themselves, they’ll be in the perfect position to help others through generous giving.
And don’t we all want our children to grow up to be generous, charitable adults?
Now that you know the end goal of money parenting your child, you’re probably wondering how you’re supposed to organize a money education to get your child to that point.
Don’t worry, I won’t leave you hanging. I’m going to share with you the ONE money activity you should focus on to start getting your child to that goal.
Focus #2: Anchor Your Child’s Money Education
Teaching your child how to identify coins and make change certainly needs to happen (you can find coin addition and subtraction sheets anywhere – they’re a dime a dozen on Pinterest).
But I’m going to help you go beyond that.
The absolute best way to start a money education with your child – the kind that will end with them becoming financially independent so that they can give generously to others – is for you to help them come up with a savings goal.
Think about it – by helping them narrow all their wants and needs down to what I call a quick-win savings goal:
- You don’t have to reveal any of your household financial information to get their money education rolling.
- Your kid will be super interested, as their actions will result in them getting something that they want.
- Your kid will be learning a vital, money life skill that will serve them well as a financially independent adult.
- All of their money questions and your responses to them can be in the context of a kid’s money goal, meaning they won’t be that hard to answer.
How to Teach Kids to Save
When helping your child choose their first (or 9th) savings goal, you want to steer your child towards a short-term one (unless they’ve already got lots of experience with the process, and they can handle something like saving up for an iPhone as a kid).
To get to an appropriate goal for your child, use this free, one-page goal worksheet for kids.
It will help them to whittle down all their wants and needs to the best savings goal for them (hint: it’ll be the quick-win savings goal so that they get enough satisfaction out of the process to come back to the savings goal line again and again).
Their savings goal then becomes the perfect springboard for the rest of their money education.
This is because they’ll probably be eager and curious about other things that will help them to get to their savings goal faster – such as how people earn money, how they can start a business, how a bank can get them to their goal faster with compound interest, what a bank is, researching best prices/price comparison, etc.
If you can anchor your child’s entire money education around your end goal of raising a financially independent adult who is capable of giving generously to others, then you’ll eliminate a lot of the confusion of it all.
Then, pair your intentions with a savings goal your child is very curious and excited about.
Get those two things down pat, and your child’s money education will practically reveal itself.
About the Author
Hey-ooo! I’m Amanda L. Grossman from MoneyProdigy.com, where I teach kids aged 8-13 how to manage their money through Money Educational Adventures (like the Mt. Everest Money Simulation). I’m a Certified Financial Education Instructor, and won a 2017 Plutus Foundation grant to bring my creations alive.