When we think of literacy for children, we usually think about reading and language skills, but what about financial literacy? It may not be taught in schools…yet…but you can easily teach your kids the ABCs of making, saving and budgeting money.
The first step to understanding what to do with your money is to actually make some money. There are lots of ways for children of all ages to start making some money of their own.1 Along with providing a weekly or monthly allowance (if you choose to do this), children can also earn extra money to put towards their spending, saving or investing goals by:
- Doing extra chores around the house
- Offering to mow the lawn or shovel the snow for family or neighbours
- Babysitting younger siblings or neighbourhood children
- Setting up a bake sale or lemonade stand
- Starting a dog-walking or pet-sitting service
Earning their own money is a great way for children to learn the value of money and to appreciate the value of work. Now that your child has earned a bit of money, the next lesson should be about saving that money.
Feed the Piggy! Piggy banks go way back. First seen in the 15th century, they were pots or containers, made from a material called pygg clay, that were used to store coins.2 Playing on the name of the clay, the pots started being made in the shape of pigs or wild boars and it just stuck. Today, you can encourage younger children to save some of their hard-earned cash with a piggy bank of their own. Older children may prefer to have their own bank account. However they choose to save their money, saving can be more fun if there’s a goal involved. That goal can be short-term like a new toy or treat, or longer-term like tickets to a concert or sporting event. Saving towards a goal will have the added benefit of teaching your child about delayed gratification and wants vs needs which, in today’s world of instant everything, may help them stick to their goals later in life.
So, now that your child has earned some money, and has set a savings goal, it’s time to talk about budgeting so that goal can become a reality. This can be as simple as tracking their money using the 50/30/20 rule:3 needs/wants/saving. Another important lesson to teach is about household budgeting. Share your household budget with your child so they can learn what is included like groceries, rent or mortgage, entertainment, transportation, and savings. This will also help them understand the difference between fixed and variable expenses. If you don’t have a household budget, you can create one together!
And, finally, don’t miss an opportunity to teach your child about financial literacy through everyday activities like grocery shopping, banking, and vacation planning.
- Life stages
- Personal finance and saving