When it comes to financial literacy for kids, it is important to start young.  Now that you’re an adult, you may have a few regrets related to money. Whether it’s wishing you saved more in your 20’s or that you started saving for retirement sooner, you may have plenty you would want your kids to avoid doing.  Even though you can’t change your past mistake, you can teach your children solid money habits.  This will help them make wise financial decisions as they become independent young adults.

How can you help impart financial literacy for your kids? Be a positive money role model.   In this article, we’re going to share our favorite tips for sharing your knowledge and wisdom about money to your children.   

Always make a list – and stick to it


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Financial literacy for kids starts with firsthand experience.  Do your kids accompany you to the grocery store and for other errands? They should be.  Before you hit the road, you’ll want to sit down with your children and encourage them to help you make a list of all the things you need for the household. This is an excellent opportunity to review the differences between needs and wants. Of course, they may want you to add a new toy to the list, but you can explain how it’s more important to buy school supplies or groceries for the week. You can even review coupon circulars together to compare prices. Then, when you go to the store, make sure you stick to your original list – no matter what! No one’s allowed to make an impulse purchase. 

Review your utilities bills with your kids


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If your children are old enough to understand the concept of a bill, then you may want to show them your monthly electric, gas, and water bills. Together, you can start boosting energy efficiency in your home and start saving money on utilities, especially if you make a game out of it. Explain to your children how your family can save money by shutting off lights when they leave the room, taking shorter showers, or unplugging devices that aren’t in use. Then, every month, you can review the bills together again and see if you’ve reduced your usage.  Reward your children with a small treat if you’re able to see the energy savings. 


Use Cash


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Using cash is key when it comes to the topic of financial literacy for kids.  Unfortunately, cash is being used less and less nowadays.  Although you may be using your debit card which is linked to your checking account, do your kids understand the money is coming from your check for the work you do?  If not, they just see the card being swiped.  Furthermore, especially with younger kids, they may not understand the concept.

The best thing you can do in this case is to use cold hard cash.  It is tangible and teaches kids that money has its limits. When they see you pay $100 for groceries and then ask you to buy them a toy at Target on the ride home, you can explain that you used up the cash at the grocery store.  On the flip side, using cards makes it seem like money is endless.

Make savings a priority!


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Teaching kids how to save money is a key component of financial literacy for kids. With instant gratification at all our fingertips (both adults and kids alike),  putting money in a savings account needs to be a conscious ongoing effort.  Start the conversation about the benefits of saving money for the things you truly want to buy as opposed to mindless spending.

If you have children that are at an age where they may be getting an allowance, encourage them to take some of the money and put it aside in their piggy bank.  Furthermore, get them involved with your family savings plan.  Hopefully you are putting money aside on a regular basis for an emergency fund, a family vacation or for any other financial goal.  When your kids see you saving, it will rub off on them.  Get them going on this early and as they grow up and eventually head out on their own, they will feel confident in their personal finance habits.

Spend quality time, not money


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Many busy parents will simply buy their kids more toys, activities, and other distractions because they simply don’t have time to give. Instead, try to substitute money for quality time. If you’re tempted to buy your child an iPad app, so he or she can be amused for a few hours, see if you can take that time instead. Substitute the app for a hike in the park or a game of catch. Or you can cook a meal for the family together and save even more time. Your child will begin to realize that building strong relationships is more important than spending needlessly.