I wrote this content originally for BudgetTracker in January 2013.
The best way to make personal finance real for children is to make personal finance real.
Sound strange? Consider this: we all know that the only way to gain experience is to experience the thing for yourself. Therefore, the best way to teach children about personal finance is to give them money in a controlled environment and help them learn how to use and save it properly.
Personal finance for children in a classroom
Using actual money may not be appropriate for a classroom. Instead, create your own form of currency in the way of a points system, using time, coupons or bonuses. All children value something: maybe in your classroom that would look like more silent reading time, more time on the classroom computer, or perhaps points that can be stored up and used to “purchase” classroom items such as pencils, erasers, or homework passes.
Create a classroom system or budget around students earning points by completing homework or scoring a certain score on a test or quiz. You could also add to that list performing basic tasks around the room, such as cleaning the board or helping the teacher in some way. Create lessons around tracking, “spending” and “saving” those points to teach the core principles of personal finance: earning, spending, and saving one’s resources.
Personal finance for children at home
Even if money is tight at home, you can still use small amounts of money to teach children how to earn money, save money, and spend money wisely. Besides the usual chores that a child does to help pitch in around the house, consider putting up a “hiring board” that features above-and-beyond chores that a child can do to earn twenty-five cents, fifty cents, or a dollar. This is money that a child would earn upon completing the chore satisfactorily and money that would be his to do with as he likes (within the rules of the home, of course!).
When a child can pick and choose when to work and when to not work, the connection between working and money deepens and lays an excellent foundation for later in life.
More resources for teaching personal finance to children can be found on websites such as the National Financial Educators Council website and the Jump$tart.Org website.