With extra time at home with your kids these days, now could be a great time to try your hand at starting a conversation about money. We know it can feel daunting to start the process of teaching your kids this important life skill; however, showing children how to manage money doesn’t have to be complicated or uncomfortable. Start early and kick things off with the basics!

Getting your kids involved in money management and financial responsibility:

  • Money doesn’t grow on trees
    For kids, it’s important to clarify the relationship between work and money. Sadly, money doesn’t magically appear in our wallets. When kids see cash pop out of the ATM, they may not understand that money is an earned and finite resource. Let your children know that adults work hard to earn money, and the bank accounts are important tools that keep money safe.
  • Make it a game: Wants vs. Needs
    The next time you’re shopping with your child and adding things to your cart (even if it’s online!), ask them if the item is a “want” or a “need.” Let them share what they think, then give them your answer. Explain how you decide to use your money, and define wants and needs in simple, easy-to-understand terms. It’s important to teach kids that it’s okay and normal to have wants, but you can’t forget to always balance what you want with what you truly need.
  • Practice budgeting together
    Give your child a budget—for your family groceries or a home project—and have them create a list of wants and needs with costs listed for each item. Have them make a “buy” list that doesn’t exceed the budget. Ask them how they came up with their list—did they include everything they need? How did they choose what else could fit in? The lesson learned is: It’s important to get what matters most before buying unnecessary wants on the list.
  • Saving, spending, and giving
    Knowing where your money is going is an essential part of the budgeting process. To keep things simple, break things up into three categories for your child: Savings (money they won’t spend, because it’s important to start building a rainy day fund), Spending (money for everyday wants and needs), and Giving (money for their favorite causes and charities). If your child is doing chores for an allowance, it can be helpful to put equal amounts of allowance earnings into each bucket to keep things simple. Every few weeks, you can ask them how they’re doing on each of these ‘buckets.’ What do they have in total savings? Have they accumulated enough ‘spending’ money to buy that new toy they’ve been wanting—and is that how they want to spend the money? Where do they want to donate the charity funds?
  • Money in the bank!
    To really connect the dots, you can help your child open their very own savings account. As they keep accumulating money in their rainy day fund, they can deposit the money into their account at the bank, where it’s safe and secure. Each month, you can show them how to read the statements, and explain what it means to earn interest on savings kept at the bank.

Long-term rewards

Learning how to manage money early in life can help children become financially responsible teens and young adults. Shaping money habits and building sustainable relationships with money doesn’t have to be a struggle—repetition, routine, and real-life practice are key. And, of course, modeling good behavior. When your kids see you make smart money choices, they’ll be better equipped to do the same as they grow up, too.