Most of us have made financial mistakes in the past. From bad decisions with credit when we were college students to waiting too long to start our retirement funds, we all have a few financial regrets in our histories. For this reason, most of us want to teach our kids how they can do better and avoid so many typical financial blunders.
The truth is that most parents wait far too long to start teaching their kids about how to be smart with money. Very young kids are actually quite responsive to lessons about finance, especially simple principals like using coupons. If you want to raise financially intelligent kids, here are some tips on how to teach them the concept of using coupons and saving money.
Start With Play Money
Most of us start teaching our kids how to count when they are quite young. Young kids respond better to visuals than they do to abstract ideas. Instead of using other objects when you’re teaching your kids how to count, use fake money. Start small, with concepts as simple as “one dollar, two dollars, three dollars.” As your kids get older and master basic counting, use pretend money to teach the concept of how it takes a hundred cents to make a dollar, 25 cents to make a quarter and so on.
This might seem like a very rudimentary concept, but these lessons with pretend dollars and cents can have a huge impact in teaching your kids about the concept of money. Ensuring that your kids understand how money actually works is the crucial first step in teaching them to be savers and savvy shoppers.
Make Every Errand A Learning Experience
We acknowledge that trips to museums and educational attractions are teaching opportunities, but we often fail to see that simple errands can be a wonderful opportunity to educate your kids as well. For example, when you’re at the grocery store, explain to your kids how a gallon of milk costs only three dollars, but an imported gourmet food item costs considerably more. Show them how the ingredients to make a cake are pretty cheap and how a pre-made cake from the bakery is comparably more expensive. When you go to check out, explain how your check or debit card represents actual dollars and cents in your bank account.
These little lessons at the grocery store or drugstore might seem minor, but over time, they can really help in educating your kids about the value of a dollar.
Once Your Kids Understand Money, Introduce Coupons and Sales
Once the foundation for teaching your kids about money has been laid down, you can start teaching them about coupons and sales. If your kids understand that items cost money, it’s time to teach them about how coupons and sales can reduce the actual amount that the consumer pays. Explain why companies create coupons and why stores put items on sale; since they know that people want to save money, they take a slight loss to encourage people to buy a product from a certain brand or store.
Coupon clipping is a great family activity. Go through the coupon inserts in the Sunday paper and talk about whether or not your family would be interested in buying a product that has a coupon. Explain to your kids that a coupon for five dollars off an item that’s expensive to begin with isn’t as valuable as a coupon for a dollar off an item that’s already cheap. These little lessons really help to teach your kids about the value of a dollar.
Give Your Kids A Saving Project
If your kids want a toy or electronic item, it’s a perfect opportunity to create a savings project. Look up the price of the item and share this information with your child. Then, discuss with them how many weeks they’re willing to wait to save up the money needed to buy the item. For example, if they want an MP3 player that costs a hundred dollars, explain to them that if they saved 10 dollars a week, they’d have the money they need to buy the item in 10 weeks.
A visual savings tool can be great for these savings project. Create a puzzle or chart with cells that represent each increment of money saved. When your child has earned that money through his or her allowance and put it into their piggy bank, you can color in a cell. This visual aid does a great job of really hammering home how saving money works and what increments of money actually represent. Encourage your child to watch out for if the item goes on sale through the internet or Sunday paper. Not only will your child work towards earning the item they want, but they’ll really learn about the value of a dollar through this exercise.
Don’t Yell or Complain About Money
Every parent has had that moment where the bills come in and they feel tempted to yell or complain about money. Try to avoid doing this, especially in front of your children. When your kids see you yelling about an expensive heating bill or your lack of a raise at work, they don’t grasp the concept that a lack of money is bad. Rather, they begin to just generally associate money with negative emotions. This mentality leads to young adults opening up lines of credit that they can’t afford, since they associate fast cash with instant happiness and relief from negative emotions.
When you’re teaching your kids how to be smart savers, you want the experience to be a positive one. You should be encouraging your kids to feel excited about finance, not discouraged by it. This is why it’s so important to avoid letting your kids see or hear you complain about your financial woes. If you have to get it off your chest, do it away from them with your spouse.
Raising financially smart sons and daughters is a challenge, but you can do it if you making financial education a regular part of your kids’ lives. If you implement these tips in your household, your kids have a good chance of avoiding the financial blunders that so many young people make in college and their early 20s.