One of the first things you might want to teach your child is that although money doesn't grow on trees, there are ways to make your money grow. Even a young child can learn about saving and wealth-building by watching coins and dollars pile up in a jar, while 10- and 11-year-olds can learn about investing through the gift of a stock.
In fact, today’s tech-savvy and news-watching tweens are ready to start their economics education in grade school, argues the non-profit Foundation for Teaching Economics (FTE).
And that conversation starts at home. For instance, do you find yourself grumbling or cheering at the gas pump? Tell your kids why it matters for your wallet, and more importantly, talk about what companies might benefit or suffer as a result.
FTE routinely updates its site with conversation-starting “hot topics,” drawing from videos and news reports that not only translate to the classroom, but can also be used to turn a grocery-shopping chore into a teaching moment.
For instance, the group introduces a lesson around the “chocapocalypse.” That’s right, it’s a very real dessert downer, as global supply and demand developments have sent the price of chocolate sharply higher this year. You and your kids might notice that the size of the candy bars at the checkout are getting smaller in size but not in price. Discuss!
As Soon as They Can Count
Money conversations with your tweens will mean more if you start even earlier. Experts say preschoolers can collect coins in a clear jar to help them visually understand the concept of accumulation.
"If they are 7, 8, or even 12 years old and you put their money in the bank—to them, it is gone. They need to see their savings accumulate. Money needs to be visceral," says Brian Page, an Ohio high school economics teacher and national adviser for the H&R Block Budget Challenge.
Tips for Teaching the 12-and-Under Set
Don't tie an allowance to chores. Experts say introducing an allowance around the age of six is appropriate, but don't tie it to household chores. Everyone in the family needs to help around the house in an age-appropriate way, and the goal of an allowance should be to teach saving, spending, and later on, budgeting and investing.
Help set savings goals. Give kids a jar each for saving, spending, investing, and giving. Work with young kids to set a savings goal, whether it’s a video game or a new American Girl doll dress. Then help them work toward it. "This will teach them about delayed gratification. Praise them once they meet their savings goal," Page says.
Give stock as a gift. Around the age of 10 or 12, consider purchasing stock as a gift for your child. Pick a company that has some meaning for the child, perhaps a favorite toy manufacturer or athletic shoe company. Use the stock as a teaching tool for early conversations about how the economy and markets function. This is an opportunity to show kids how they can make their money work for them. Plot the price of the stock and show them how it rises over time.
"Explain that when a company is productive and run well, the value of the company grows. If you buy a stock, you can potentially get the benefit from that," Page said.
If you begin to arm your children with a common-sense approach to money—and introduce saving, spending, investing, and economics not as a lecture but as part of everyday, casual observations of the world around you—it could pave the way for a long, healthy relationship with money.