Rachel Cruze: 6 Ways To Teach Kids About Money
Written by
Katie Wudel
Edited by
Emily Gadd
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If you want your children to have a financially stable future, teaching them about money while they are young is important. Rachel Cruze emphasizes the importance of educating children about money.
Cruze’s insights serve as blueprint for parents and guardians aiming to instill sound financial habits in their children. Here’s her advice for how to teach kids about money.
1. Visualize Savings with a Clear Jar
Cruze discussed the importance of financial literacy in a recent article on the Dave Ramsey website. She says a clear jar allows children to visually track the growth of their savings. This tangible representation of money accumulation makes saving exciting. It also provides an excellent opportunity for parents to discuss the benefits of financial growth and the significance of saving.
2. Be a Financial Role Model
Children often mirror their parents’ behaviors and attitudes. Cruze highlights the formative years between ages 6 and 12 as critical for developing money habits. By demonstrating prudent financial decisions, such as thoughtful spending and avoiding frequent arguments over money, parents can set a powerful example for their children to emulate.
3. Teach the Value of Money
Cruze suggests allowing children to physically exchange money for goods to foster a practical understanding of money. This hands-on approach not only demystifies the concept of monetary value but also fills them with a sense of responsibility and the realization that material goods come at a cost.
4. Introduce the Concept of Opportunity Cost
Helping children grasp the concept of opportunity cost is vital in nurturing their decision-making skills. Cruze recommends using relatable scenarios to explain that spending money on one item may mean forgoing something else. This lesson is essential for developing a balanced approach to financial decision-making.
5. Earn Through Commissions, Not Allowances
Cruze is a firm believer in the principle of earning money through effort, as opposed to receiving an unconditional allowance. Assigning monetary value to household chores motivates children and instills a deep-seated understanding that money is earned, fostering a work ethic that transcends mere financial gain.
6. Cultivate a Giving Spirit
Beyond saving and spending, teaching children the joy of giving is fundamental. Encouraging them to donate a portion of their earnings to a cause of their choice enriches their emotional and social development. This act of generosity reinforces the notion that financial prosperity is not just about personal accumulation but also about contributing to the welfare of others.
Bottom Line
Cruze takes a holistic approach to teaching kids about money that goes beyond basic financial literacy. It’s about crafting a mindset that appreciates the value of money, the hard work behind earning it, and the impact of financial decisions on oneself and the community.
As Cruze notes, if parents don’t take the helm in teaching their children about money, they leave them vulnerable to less informed or detrimental influences. By using these six strategies, you can equip your children with the tools needed to navigate the financial world with confidence.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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