October 10, 2024
5 Simple Ways to Teach Your Elementary School Child Personal Finance
Elementary-aged children are constantly learning and observing how the world around them works. Personal finance, and other money-related subjects, are topics that will stay with them throughout their lives. Some research even shows that habits related to money and spending are solidified as early as age 7, making personal finance a somewhat surprisingly relevant topic to discuss with your elementary schooler.
Here are 5 topics and tips on how to cultivate good personal finance habits that can help your child have a baseline for lifelong financial literacy.
- Price Comparisons: When making important shopping decisions, it is critical to compare items, quantities, and prices to ensure you’re getting maximum value from every dollar. Pointing out prices and brand differences to your children allows them to be cognizant of the numerous options available to them. For example, in the grocery store, if
the box of cereal that your elementary schooler picks out is $5, and your budget is $4, encourage them to find a box that is under $4. You can also point out how the “Unit Price” (rather than the sticker price), is the best way to determine the true cost of an item, especially when buying in bulk. Make it a fun scavenger hunt to find the best deals!
- Debit vs. Credit: In the age of cashless payments, all plastic cards in wallets can appear the same to young children. Take the time to explain the basic
concepts of debit and credit when you pull a card out to pay. Debit is money that you already have saved (such as money in a piggy bank). Credit is like borrowing money from a friend, and needing to pay that money back, which is why you must be more careful with buying things on credit. This differentiation between these daily money terms introduces the concept of credit on a very basic level.
- Discuss Allowance: A lot more thought goes into spending one’s own money vs. having something bought for you, and one great way for them to earn this money is through an allowance. Assigning age-appropriate chores, or associating allowances with academic and behavioral performance, gives elementary-aged children a chance to earn some of their own money. Another way for 7–12-year-olds to dip their toe into earning their own money is through starting their own little business, such as a lemonade stand or selling used clothes and toys at a yard sale. This entrepreneurial
activity introduces the concept of sales and handling money, even if their only customers are mom and dad. Did you know? Warren Buffett got his start by purchasing 6-packs of Coca Cola for 25 cents, then selling each of the bottles for a nickel...a 20% profit and insightful life-lesson!
- Open a Savings Account: Developing the habit of saving for the future is critical at this age. Opening a savings account for your child is a great first step for
them to have a safe place to store their hard-earned allowance. Going to the bank as a child feels like a big deal and provides a great opportunity to let them track the amount in their account and see the accumulation of interest payments. “Saving a dime for every dollar earned” is a simple mantra for children to understand, ingraining this critical habit.
- Giving: Money isn’t just for consuming. Giving back to the community is also a part of budgeting and spending decisions. Whether this is allowing your child to
give coins to a street performer, supporting a fundraiser at their school, or picking out a charity such as a local library or animal shelter, giving can help them understand the importance of charitable contributions. Giving to charity is also important for mental well-being and personal fulfillment. Remember, it’s the action, not the amount, that matters.
Kids learn through play, and there are many sites online that you can feel good about your child using. “$uper $quad” by www.fitmoney.org is designed for elementary-aged children to learn financial literacy skills through digital gameplay, and one that we highly recommend. The game only requires an email to play, and they won’t send any pesky spam to your inbox. This online game teaches budgeting, coin counting, price comparison, and more in a way that is relatable for young kids. Life is busy, and it’s impossible to slow down and explain every financial decision to our children. That said, every little bit that you teach them now is a future mistake you are helping them to identify and avoid.
