Is Your 7-Year-Old Good With Money? If Not, Here’s How to Change That

3 min read|Apr 5, 2022|fbtwitteremail

As a parent, protecting your kids is a top priority. And yes, that includes major money mistakes. Experts say you should start teaching your kids money lessons early because money habits can be created as early as seven years old.

How can I teach my kids financial literacy?

Set an example. 

Let kids in on household budget discussions. For bill convos, explain to your three-year-old that things around the house (like electricity) aren’t free. And talk about how and why you choose to spend money (or not) for the fam. If you have a teen, try starting them off with some lessons on investing. (You can bring the convo to car payments and insurance later.)

Try money games for kids.

Because finance can be fun. And there are tons of kid-friendly games that teach money management lessons. Like these money games for kids from the US Mint.

Put them to work. 

Giving your kids an allowance for doing chores can help them understand the concept of working to earn income. Then you can move on to beginner lessons on how to make a budget.

But I don’t agree with paying my kids for chores.

Earned allowance doesn’t work for everyone. Some families view chores as a necessary part of any household, not something extra that deserves a reward. There’s no right or wrong way of doing it. If you’re not into paying for chores, there are other ways to teach hands-on money lessons. (More on that below.)

So…what are some other ways for kids to make money?

Everyone, including kids, can benefit from a fun side hustle. Like teaching. If your kid is good at an activity like music, they might be able to make money from teaching others how to play an instrument. More traditional ideas: setting up a lemonade stand or babysitting.

What about teaching kids how to save money?

Discuss saving a portion of what your kids earn for long-term goals like a college fund. And encourage realistic savings goals. If allowance is your thing, instead of giving them cash regularly, try recurring transfers to a traditional savings account — which you can set up through your bank. Or consider the kid-focused banking app Goalsetter (created by Tanya Van Court to help fight the racial wealth gap). It lets you set up autopay for allowances and lock up that money until they pass a financial literacy quiz. (Win, win.)

Or you can consider a trust fund if your means allow for setting one up. You would need an attorney to draft your trust documents, which is part of the reason a trust fund can cost several thousand dollars to get started.

theSkimm

The earlier you let your kids in on money conversations, the better their money management skills will be as adults. But remember to keep it fun.

Skimm'd by Dae Cason, Megan Beauchamp, Sagine Corrielus, Stacy Rapacon, and Alicia Valenski