A little girl was asked what she learned in Sunday school that day. She replied, “We learned about the Israelites crossing the Red Sea.” The person asked, “Oh, that sounds interesting. What did you learn?” The little girl replied, “Well, the Israelites were being chased by the Egyptians, and they had to cross the Red Sea. So they asked Moses to ask God to help them. And God said, ‘No problem, just write a check!’”

While this may be a silly story, it highlights the importance of teaching kids about money management and responsible financial behavior from a young age.

Teaching your kids about money from an early age can equip them with the skills they need to succeed financially in the future. Research shows that children who are exposed to financial concepts at a young age are more likely to have better financial outcomes as adults.

Here are some practical tips to get started:

Practice saving with kids

Start by teaching your kids about simple financial concepts such as saving, budgeting, and the value of money. According to a study conducted by the University of Cambridge, children who have a savings account are more likely to exhibit positive financial behavior in the future. By teaching your kids about saving money and the benefits of delayed gratification, you can set them up for financial success. One simple tool for achieving this is a piggy bank. In our household, we have a piggy bank where my son puts all the cash that he receives from adults during events or birthdays. Once a year, we empty the piggy bank, count the cash, use some of it to buy a cherished toy or book that my son has selected, and deposit the rest into a special savings account that we have opened in his name. This teaches him to save, delays the instant gratification of spending the cash right away, and rewards him for his good financial behavior, which motivates him to continue the practice.

Encourage financial decision making

Encourage your kids to make smart decisions with their own money. According to a study by the National Endowment for Financial Education, kids who have experience managing their own money are better equipped to handle financial challenges in adulthood. You can help your kids set a goal and save money to achieve it, teach them how to create and stick to a budget, and how to make informed decisions when spending money.

An example of this could be giving your child an allowance and allowing them to decide how to spend it. This gives them the opportunity to make financial decisions and learn from their mistakes. If they spend all their money on toys in the first week, they will have to learn to budget and save for the rest of the month. This experience will help them develop good financial habits and prepare them for adulthood.

Involve your kids in family financial discussions and using everyday situations

Research shows that parents who discuss financial matters with their children have kids who are more likely to exhibit positive financial behaviors. This can be as simple as discussing the family budget or bills, or more complex topics such as investments or retirement planning. This will help your kids understand the real-life applications of financial concepts.

For example, when shopping with your kids, you can help them understand the difference between needs and wants, and how to make smart purchasing decisions. You can also involve them in paying bills or managing household expenses. This will help them learn how to manage their own money in the future.

Be a good financial role model for your kids

Kids learn by example, so it’s important to demonstrate responsible financial behavior. A study by the Consumer Financial Protection Bureau found that parents who exhibit good financial habits have kids who are more likely to have positive financial outcomes. Show them how you save money, make smart financial decisions, and live within your means.

By following these evidence-based tips, you can help your kids develop a strong foundation of financial knowledge and skills that will serve them well throughout their lives. Start early and make learning about money fun and engaging for your kids!