As an award winning author of the children’s book Money Mama & The Three Little Pigs, creator of Money Mama and the Smarter Piggy Bank, It’s Only a Dollar, and author of the new parent’s workbook Design Your Child’s Financial Future, Mackey has made it her mission to design fun, engaging financial education products and resources for parents and children.
When talking to kids about money, Lori said there’s really no age limit to get started: the earlier, the better.
Allowance is great way to teach children the value of money. Lori points out that children will never spend their own money like they would their parents’ money, so giving them some control will teach them how to budget. She also said that parents can think of an allowance as a tool that teaches kids to earn and spend money. Allowances can be chore-based, behavior-based or based on the household rules. One caveat is to not pay kids for chores they are already performing but as rewards for those that go above what’s part of living in the house as part of the family.
To help kids understand what goes in to wages and how to budget, take an item and divide it by the minimum wage to show them how many hours it would take to pay for that item.
And if children question spending vs. saving, don’t necessarily go over their heads with talk of the overall economy, but do tell them the family budget is focused on saving instead of spending and that a lot of the extras are not in the budget right now.
Overall, the best way to teach your children about money is talk about it with them and lead by example.