From the time children drop their first few coins into a piggy bank, they are ready to learn about setting savings goals and making smart spending decisions. The experts say the sooner parents start imparting these lessons, the more effective they will be in helping children grow into financially responsible young adults. The trick is to take advantage of teachable “money moments” that happen every day — such as when you go to the bank or the grocery store — to help children understand complex concepts in kid-friendly terms.
“If children are included in family financial discussions, such as planning for a fun vacation or purchasing a high-cost toy, then parents can begin to place daily spending decisions in a context their child will understand,” says Stuart Ritter, CFP, a family financial expert with T. Rowe Price, and father of three. “Teaching children to set savings goals and make decisions about money that align with those goals is much easier when the discussion is concrete rather than abstract.”
A complementary approach is to introduce children to games that teach basic money lessons. One example is the game “The Great Piggy Bank Adventure” at GreatPiggyBankAdventure.com. T. Rowe Price collaborated with Walt Disney Parks and Resorts Online to produce this free online board game, which conveys basic financial concepts in a way that is fun and easy for kids to understand.