One of the most important aspects of teaching teens the power of money is realization that specific money concepts should be introduced to your kids and teenager as specific ages. Introducing some concepts to your kids to early usually leads to frustration and anger with kids and parents.
Below is an outline of age appropriate strategies and money skills kids should understand.
During the years between 5 - 10, kids are beginning to get a glance about the world around them. Here is a brief overview of some of the experiences many kids should have regarding money between the ages of 5 - 10 years old:
- Indentify money (dime verse nickel verse a quarter)
- Carry money to pay for lunch at school.
- Learn to comparison shop. Purchased books at the school book fair or at a home school event.
- Have an allowance. Learn the habit of working for money.
- Understand it take money to buy things. From the toys at the toy store, the candy at the grocery store or stuff on TV commercials, it takes money to buy things. Nothing is free.
Between the years of 10-13 here are some milestones to guide you to help educate your pre-teenagers about money:
- Open a saving account. Of course, you can open a saving account when they are younger, but if they don't have a saving account, consider opening one for them during these years. You can open a saving account with as little as $20. A savings account will teach them about the banking system.
- Shown them the saving account statement. Most banks send out statements for savings accounts once a year. When this arrives, this is an excellent opportunity for you to remind your child about the money they are saving for the future.
- Increase the amount of the weekly or monthly allowance. An allowance isn't a right of passage many kids think it is. As you increase their allowance make sure to increase the amount of their choirs they do around the house. During this time your kids will begin to understand the value of working and the true meaning of earning money.
- Open up a brokerage account. This will introduce kids to the basics of investing. You can open up a brokerage account online within a few minutes.
- Open a DRIP account. DRIP stands for Dividend ReInvestment Program. This is a great way to buy stock directly from the company at zero or very low cost. In addition, your child will also receive quarterly and annual statements from the company you investment.
Setting age appropriate financial goals for your kids and teenagers will help them to become money smart teens and successful throughout their life.