It is important for children to be financially literate and this guide will help you provide valuable lessons to your grade school child about money.
Allowances and Spending Plans
One of the earliest lessons that children need to learn about money involves its limitations. You only have so much money, and it can only buy so many items. Allowances and spending plans are ideal tools for teaching them, at early ages when they have safety nets in place and about the importance of both.
Allowances teach them to manage their money. You can set the parameters for how much those allowances should be, and if there are any chores to be done to earn that allowance.
Spending plans help children learn how to use their limited funds and allowances to help them accomplish specific goals. They teach them about spending wisely and staying within their means each month while also setting some money aside for items that are important to them.
Being Responsible With Money
While financial responsibility is often tricky for grade school children, developing this skill, at this point in their lives, helps them set the stage for money management skills and techniques as they age and find themselves making essential decisions about their spending.
Concepts to teach here include:
- Need vs. Want. Explain the differences between the two to your child and ask, when they seek to spend money if they are spending for a need or a want.
- Teach children about opportunities to save money on their purchases. That includes things like using coupons, waiting for sales, and buying second hand to save money.
- Give them opportunities to practice. Give them practical tasks to create budgets, spend wisely, and enjoy the rewards of spending responsibly. They can learn by doing.
Small things like these teach young children greater responsibility at early age.
Most grade school children have a pretty basic set of wants and needs. Some have specialized interests or want at least one big-ticket item, such as a new bicycle. Teaching your child to comparison shop for that big-ticket item will help them understand that prices differ from one location to the next and that investing their time and effort can help them spend more effectively.
Putting it all Together for Greater Grade School Financial Literacy
At the end of the day, you want to lay the foundation for your child to face fewer financial struggles as an adult. Teach your child the basics of things like:
- Using coupons to save money
- Comparing costs
- Saving and investing money so they can watch it grow
- Understanding the differences between needs and wants
Most importantly, allow your child to practice the valuable lessons you are teaching. Doing these things will help your child develop exceptional financial skills that will carry over into adulthood.