5 Important Lessons to Teach Your Kids About Money

A father and daughter putting money in a piggy bank.

Knowing how to manage one’s personal finances is an invaluable skill, but unfortunately, it’s not one that that is taught in most schools. Instead, it’s up to parents to educate their children about money, both by setting a good example and through hands-on activities. According to a study conducted by the University of Cambridge, kids form their money habits by age 7, so it’s extremely important to start imparting financial wisdom early.To help give you some ideas, Tennessee State Bank has put together a guide to five crucial lessons every parent should teach their children about money.

1. Being Patient with Your Money Pays OffA little girl sitting at a desk with a jar full of coins.

Learning the importance of delayed gratification will serve your children well throughout their lives. To teach this lesson, have your child choose a toy that she would like to buy and encourage her to save up enough money to purchase it on her own. Make sure that the item in question isn’t too expensive, because a young child might grow frustrated and give up if she has to wait for months and months.2 While piggy banks can be fun for children, a clear jar is even better for saving money, because it lets kids see their coins and bills grow over time.3

2. Money Must be Earned

In order to truly understand the value of money, you need to work for it. Instead of just giving your children an allowance, have them earn it by completing household chores. Chores for very young children can be largely symbolic, like helping Mom or Dad set the table, while older kids can take out the trash, rake leaves, mow the grass, or do some cleaning around the house.4 Parents can also encourage children to explore age-appropriate entrepreneurial activities, such as running a lemonade stand or dog walking.5

A mother and daughter shopping for groceries.3. Always Look for Value When You Shop

In addition to learning about making and saving money, children should also know how to spend money wisely. The best real-world environment for teaching this lesson is the grocery store. As you pick up food for the week, be sure to explain your reasoning for each purchase.6 For instance, show your kids the difference in price between generic cereal and name-brand cereal so they understand how much money you’re saving.7 Make sure that you always use a list at the supermarket since this teaches your children that thought and preparation are key when it comes to shopping.8

4. Sharing Your Money Helps Those in Need

It’s never too early to teach your children about charitable giving. Once your child has saved up a bit of money, encourage her to give a portion of these funds to a cause that she cares about.9 A great way to instill the importance of charity is to create three different money jars for your child: one for Saving, one for Spending, and one for Sharing. At the end of each month, your child can make a donation from the Sharing jar.10

5. Your Money Should Be Managed at a Bank

When your child has saved up a significant amount of money, it’s time to graduate from glass jars to a bank account. Parents can set up an account at Tennessee State Bank in their child’s name and one of our friendly employees can explain the basics of banking to your little one. Having a bank account of their own is an important milestone for children and it prepares them for smart money management as adults.11

About Tennessee State BankThe corporate headquarters for Tennessee State Bank.

Tennessee State Bank has been serving our local community for over 45 years. With branches in Sevier County, Knox County, Cocke County, and Jefferson County, we offer convenient banking services in East Tennessee. Whether you’re looking to open a checking account, obtain an auto loan, or apply for a home mortgage, we make the process as simple and straightforward as possible. Tennessee State Bank’s motto is “Banking at its Best!”SM, and we strive to live up to that creed every day. Let us know how we can help you by sending us a message via our Contact Form.

Tennessee State Bank is Member FDIC and an Equal Housing Lender.
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References
1. Shin, Laura. “The 5 Most Important Money Lessons To Teach Your Kids.” Forbes, 15 Oct. 2013, www.forbes.com/sites/laurashin/2013/10/15/the-5-most-important-money-lessons-to-teach-your-kids/
2. Shin, Laura. “The 5 Most Important Money Lessons To Teach Your Kids.” Forbes, 15 Oct. 2013, www.forbes.com/sites/laurashin/2013/10/15/the-5-most-important-money-lessons-to-teach-your-kids/
3. Ramsey, Dave. “15 Ways to Teach Kids About Money.” Dave Ramsey, www.daveramsey.com/blog/how-to-teach-kids-about-money
4. Ramsey, Dave. “15 Ways to Teach Kids About Money.” Dave Ramsey, www.daveramsey.com/blog/how-to-teach-kids-about-money
5. “Everyday Lessons to Teach Kids about Money.” Money Management International, fsp.moneymanagement.org/Budgeting-Tools/Credit-Articles/Youth-and-Money/Everyday-Lessons-to-Teach-Kids-about-Money.aspx
6. Everyday Lessons to Teach Kids about Money.” Money Management International, fsp.moneymanagement.org/Budgeting-Tools/Credit-Articles/Youth-and-Money/Everyday-Lessons-to-Teach-Kids-about-Money.aspx
7. Shin, Laura. “The 5 Most Important Money Lessons To Teach Your Kids.” Forbes, 15 Oct. 2013, www.forbes.com/sites/laurashin/2013/10/15/the-5-most-important-money-lessons-to-teach-your-kids/
8. Everyday Lessons to Teach Kids about Money.” Money Management International, fsp.moneymanagement.org/Budgeting-Tools/Credit-Articles/Youth-and-Money/Everyday-Lessons-to-Teach-Kids-about-Money.aspx
9. Paxson, Samantha. “6 Lessons About Money to Teach Your Kids.” ParentMap, 2 Nov. 2017, www.parentmap.com/article/teach-children-saving-money-finances
10. Shin, Laura. “The 5 Most Important Money Lessons To Teach Your Kids.” Forbes, 15 Oct. 2013, www.forbes.com/sites/laurashin/2013/10/15/the-5-most-important-money-lessons-to-teach-your-kids/
11. Everyday Lessons to Teach Kids about Money.” Money Management International, fsp.moneymanagement.org/Budgeting-Tools/Credit-Articles/Youth-and-Money/Everyday-Lessons-to-Teach-Kids-about-Money.aspx