5 Tips for Teaching Young Kids About Money

It's unfortunate, but true: money management isn't taught in our public school system. Therefore, that responsibility rests solely with you, the parent. Even if you have your own checkered financial past, you can still instill in your children the knowledge to be financially successful. In order to get your message to sink in, here are five tips to teaching young kids about how to manage money.

1. Speak in Simple Terms

If you overwhelm your child with technical jargon, they're likely to lose interest. Therefore, make sure you speak in words you child can understand. Instead of talking about annual percentage rates, just explain that the credit card company charges you money if you don't pay your entire balance. Rather than talking about compound interest, say that the banks pay you money to save.

2. Speak to Them on Their Level

To help impart your message, speak to your child at his or her own physical level. Kneel down and speak face-to-face so you child doesn't need to look upward.

3. Use Visuals

If you're currently carrying a credit card balance, break out your statements so you can provide your child with visual, real-world examples of the dangers of poor money management. Besides, the process of explaining the true costs of credit card debt may motivate you to finally eliminate it. You can also use bank statements or

4. Actively Engage Them in Saving

As soon as your kid is old enough to understand the basics of money, consider helping him or her open a savings account. This is a great motivational tool to get kids to better understand money management.

5. Learn how to Say No

I know it can be difficult to turn a child down when you're in the toy aisle, but if the money just isn't in the budget, then say so. But don't stop there - explain to your child why it isn't affordable. Maybe it's because of a car repair expense or some other unexpected cost. Giving such an explanation helps your child to further understand how money works.

Educating your young child is a great way to set them up for a financially successful future. Habits learned at a young age are much more likely to stay with people as they age, and look at it this way: the more fiscally responsible for your child is, the less he or she will need to rely on you in the future.

What other ways can you think of to effectively teach your kids about money?