Edit ModuleShow Tags

How to Raise Money-Smart Kids

Forming their money habits young is crucial to their future habits.


Published:

Photo courtesy of New Jersey Family

One of the most important things we can teach our kids is a basic understanding of spending and saving. Yet so many of us don’t, despite the fact that kids’ money habits are formed by age seven, according to a Cambridge University study. So it’s never too early to start teaching the value of a dollar.

Where to begin? We asked financial expert and best-selling author Beth Kobliner to share her best tips to raise financially-savvy kiddos. Read on to help your kid become money-smart (even if you’re not).

WAIT BEFORE YOU BUY

This is especially true for kids in the 3-5 age range, when it’s all about teaching delayed gratification. Remember the classic marshmallow test? This famous study showed that the kids who were given a marshmallow and waited to receive a second one after holding off from eating the first were more successful adults (with higher SAT scores and lower body mass indexes) than the kids who gobbled the first marshmallow right away. So don’t give in to a toddler begging for Shopkins in the checkout line. It’s an opportunity to teach your kid that needs are different from wants.

WITH GIRLS AND BOYS, MIND THE “MONEY GAP”

Studies show that parents are more likely to talk about financial issues with their sons than their daughters. This needs to stop, especially given the uphill climb our girls will face trying to earn salaries on par with their male peers. Make sure your kids are equally prepared for a smart financial life.

SPLIT THE PIGGY BANK INTO THREE JARS

It’s important for kids to know that money goes in a safe place—and that we save it for different goals. One great technique is labeling three money jars for spending, saving and sharing. Talk about the importance of putting away some money for things we need now, some for things we’ll need later and some to give away as donations or gifts.

STACK UP THOSE BILLS

It might seem crazy, but giving your kid a wad of cash is actually a better parenting move than handing over a credit card. According to a famous Massachusetts Institute of Technology (MIT) study, people spend less when they’re using cash. This has to do with a mental impact known as the “pain of paying.” Using cash helps kids see and feel the transaction that happens when making a purchase: We have to give something up to get something we want.

MAKE IT COMPOUND

Middle school is a good time to introduce a key financial concept that’ll wow your kids. Tell them compound interest is a way to supercharge savings and explain how it works. For example, if you set aside $7.50 a month— essentially a quarter a day—starting at age 10 and earned an average of 7 percent a year, you’d have $51,800 in the bank by the time you hit 65.

Beth Kobliner is the author of the New York Times best-sellers Get a Financial Life and Make Your Kid a Money Genius (Even If You’re Not).

 

Edit ModuleShow Tags

Archive »Related Content

6 Tips for a Successful IEP

Eileen Shaklee, mom to a 13-year-old boy and the blogger behind Autism with a Side of Fries, shares her best advice for making the most of your child’s individualized education program.

Full STEM Ahead! The Best February Events for Your Budding Builders

Looking for things to do with your science-loving smarties? We’ve rounded up some of the best STEM events in the NJ area.

Get Your Wands Out! Two Harry Potter Apps Are Coming

Potterheads, clear some space on your phone. The magic of Harry Potter will soon fit in the palm of your hand.

Social Media Sites Are Fighting Back Against the Dangerous Tide Pod Challenge

The online craze is urging teenagers to poison themselves.

Call the Sitter! You’re Going to Dinner in Hudson County

Restaurant Week is right around the corner, and there are tons of new eateries on this year’s list.

Add your comment: