With the kids headed back to school, let’s talk about some of the important skills they’ll need your help with to master. It’s important to already know the key points you want to relay before taking on the teachable lessons. At each age, different lessons are the important ones; we all know a four-year-old isn’t ready for retirement planning lessons – but what are the right ones at the right times?
Here are three, easy lessons that you won’t need another degree to teach, but from which your kids will receive significant long-term gains.
Lesson 1: Delayed Gratification (ages 3-5)
A difficult concept for all ages, sometimes holding out for something we want is as hard for parents as it is for kids. For kids, it’s important to learn that sometimes we have to wait for what we want and it isn’t all about us all the time. Going to a store to help pick out a gift for another child’s birthday party can help kids realize every toy or item isn’t always going to become theirs, but that their turn will come. Introducing an allowance at this age and splitting it into “spend,” “save,” and “give” helps kids understand that money has different purposes and gets used at different times depending on what it’s being used for.
Lesson 2: Money is All About Choices (ages 6-10)
There is only so much money to go around, so how do we decide what that money should be put towards? At this age, kids can get a good understanding about the responsible ways to spend by helping you make choices about spending, saving, and giving. The grocery store is a great place to make some of these decisions because it will help your child understand the differences in prices, how to shop wisely, and you might get an extra lesson in nutrition squeezed in there! Begin to ask out loud, “Is this something we really need? Can I borrow this from someone? Is this the best price I can get on this?”
Lesson 3: Saving Pays (ages 11-15)
By this point, these pre-teens and teens should have the concept of saving conquered, but chances are the term length of the goals has been short. This is a time to introduce kids to the concept of compounding interest by showing them how saving over many years truly brings great rewards. Giving the example of saving $100 a year starting at age 15, you’ll have $23,000 at age 65. If you wait until age 35 and save $100 per year, you’ll only have $7,400 by age 65!
Learning about money concepts is important throughout our lives, but just because you’re teaching your kids, doesn’t mean you need to stop learning! Dive into a new concept so your financial know-how keeps growing with your children!