Parents know that it’s important to teach their children about money. But most parents don’t know how to do it and what is the most age-appropriate way to talk to a youngster about the subject.
Patience is golden. Rewards are sweet.
Instant gratification is… well, gratifying – for anyone. But parents who teach their kids delayed gratification is paving the way for the long run. Nurturing an herb or vegetable garden is one of several ways to do that. To celebrate each stage of the process, parents can agree with their kids to put a quarter or a dollar in a piggy bank so they can watch their savings grow along with their future harvest.
Pay it forward
Giving back to the community is an important concept that parents can teach to kids, as early as age 4. During the initial conversation, parents can explain to their kids how even a few dollars can make a big difference to someone in need. Do a bit of research and find an organization (international or local) that is known for using small amounts of cash to make a big impact. Then offer to match their donation: for every quarter your kid gives to charity, you’ll put in a quarter of your own.
‘Delicious’ motivators
Nothing like a piece of chocolate cake or a slice of warm apple pie to motivate kids (or adults) to learn! Parents can take advantage of this and teach kids how to create and honor a budget. First, bring them to a bakery and price a dessert they like. Then, find out the appropriate recipe, bring them to the grocery store, and challenge them to price each ingredient. It’s a win if the total comes in under the bakery price! But it’s back to taking a closer look in the aisles if there are discrepancies in the prices. This method is not to encourage parents to teach their kids to be extremely frugal, instead, to simply teach them how to be smart with their money.
When compound interest gets interesting
Not only does our invested money earn interest, its interest earns interest as well. Adults would understand this. But tell it to a kid, and they give you a puzzled look then runs away. Compound interest is a very important personal finance strategy. The earlier one understands it the better. Here’s what parents can do: choose a period of 60-61 days, put ten pennies in a bowl on the first day, discuss with your kid that you will add another penny for every ten pennies in the bowl, and promise to spend the money together at the end of the experiment. They will probably not believe that they’re going to accumulate A LOT of pennies by the end of the experiment, but by day 30 and the days to come, they’re going to get excited because you’re dropping more coins into the bowl, which means bigger or better treat!
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