How to Raise a Financially Savvy Kid

Teaching your child how to become financially savvy, is a smart move, considering the projected costs of living by the time most of our children reach adulthood. Like most aspects of child rearing, this needs to start early, and continually be reinforced as they grow. So, how do you begin creating an appreciation of money and its uses in your child?

It all starts with the concept of saving, and grows from there. I taught my two boys, beginning around age 5, using gardening as my teaching tool. Using the analogy of planting seeds and watching them grow, I set up a pair of jars and added coins. I explained that just like seeds, money grows when it's nurtured and sheltered. One jar was our "free" jar. Money was added to both jars equally, but money from the free jar could be used upon request. The "growing" jar however couldn't be taken from, but added to only.

Imagine their faces when one morning they discovered the free jar was empty, and the money jar was two thirds filled. That lesson wasn't lost on either of them, and they became much more aware of how spending without saving emptied out their reserves very quickly. When they turned 7, I introduced the idea of savings accounts they themselves could contribute to. I explained that placing money in the bank offering a decent interest rate could help their money grow. And that the more they saved, the more it would increase. Many parents or grandparents open savings accounts when a child is born, which is great. But it's useless without an understanding of its value as a tool.

Growing Money

Credit: US Mint

Copyright: firstgov.gov