The value of money is something so exciting to your young child. The smallest amount of money seems so large and can be extremely motivating to them. Around first grade or six years old, schools begin to teach students all about the value of money. Children learn about pennies and nickels and dimes and quarters and all kinds of bills. They also lean about dollar bills, face values, and how to add and subtract with all of their types of money. This new skill comes at a great time to begin teaching children how money is used in real life situations.
In order to create a life of financial stability, the school aged years are prime for teaching, modeling, and interacting with money. In the school ages years, children are very capable of understanding chores and allowances which can be used to show that we work to make money and then we have different options for what we do with the money. Each family should determine their own method for kids to earn money based on what fits best into their daily routines.
Once your family has put a system into effect for how their children will make money, the children need to be taught how to handle their money. As adults, we all handle our money differently. Some people spend tomorrows money today by using credit, some spend only what they have but spend every penny each paycheck, and some save as much money as they can. In order to create a lifestyle where living paycheck to paycheck isn’t the way, it is important to teach children how to save their money from the beginning.
To begin teaching saving to a child, you will need something to put the saved money into like a piggy bank or even a savings account, or both depending on the age of the child and how well they understand the value of money.
When the child gets money, let’s say from chores or an allowance, teach them to save by having them put a percentage of money each time into their savings. For example, you could give them $4 per week allowance and have them put $2 in savings and the other two they can spend or use to save up and spend at a later time.
Not only will this teach your child how to save up for something that they want, it will teach them how to save for a later date. This concept is very important to learn at a young age because as an adult, we should each have a savings account for a rainy day. For your children, I bet they will be very happy after saving a percentage of their money for years when they decide to buy a car or move out on their own. Having taught your child to save their money from a very young age will give them a great head start in their young adult years.