Parents often shy away from discussing money matters with their children. Some think that savings, expenses, budgeting and debts are topics too complicated for young minds to worry about, let alone understand. However, choosing to teach kids about money early on helps them adapt excellent money habits to make smarter financial choices in the future.
Why You Should Teach Kids About Money
One survey concluded that a quarter of Australians did not learn about money as kids. This finding is quite concerning as it reflects how today’s parents, and perhaps parents in the future, are handling financial literacy at home. Our kids learn how to count and do simple math in school, but it is up to us parents to teach them how to apply these skills in real life.
In a few years, our children will grow up and make essential decisions, from budgeting for groceries to buying a house. Instilling good financial habits to our kids in advance will prepare them for more challenges as adults. Also, the knowledge on how to manage and save money at a young age is something your children can pass on when they have kids of their own.
How to Teach Kids About Money
Teaching money management to kids may seem a daunting task for most parents. One way to overcome this fear is to start early. It’s easier to teach kids about money when you begin from simple to more complex concepts. Here’s a guide I came up with to make this parenting responsibility easier and fun!
1. Start with the basics
Fake money and printed out coins are great training tools when starting to teach kids about money. You can explain the value of money by relating it to items that your kids love. For instance, explain how much does their favourite book cost. Compare the price of two different snacks and discuss what makes one more expensive than the other.
2. Play money games
Once your little one has a good grasp of money and its value, put him to a practice transaction by setting up a pretend store. Fill your play store with things that your kid likes and assign a corresponding value for each. Let your child make a purchase using his fake money. Make sure he knows how much change he will get after shopping. Having a toy cash register is a great idea to make this make-believe playtime more realistic and fun. This step also enhances your child’s math skills and his familiarity with currency increments.
Board games are also one way to make money education interactive. Games like Life and Monopoly teach the kids not only how to spend but also how to save up for something they wish to purchase later on. Kid-friendly online games and videos that simplify money concepts are also good alternatives.
3. Introduce the piggy bank
If you’ve been training your kids to do chores at home, giving them coins in exchange for completed tasks reinforces the idea that hard work and money go together. Let your child save these coins in a piggy bank or glass jar, then ask him to save enough money within a specific time for an extra reward. A fun trip to the movies or an ice cream treat will surely make your money-saving challenge more exciting! It’s also a way to make your kids feel happy and motivated when saving money.
4. Take the kids shopping
Experience is the best teacher, so spend a weekend with your kids at the grocery store or market to apply the money concepts they’ve learned so far. Here, they can help you pick out items from your grocery list and know more about reading prices. Show them how some brands may cost more than others and affect your budget. Teach your kids to look at item prices and sizes then let them decide which options offer better value.
Going to a second-hand store is also a great learning venue for your kids. This fun activity will teach them that great things don’t have to be expensive. Let them experience bargaining for better prices! When your kids are a little older, try to set up your garage sale at home. Get them involved with the pricing and dealing with customers. Help them out when negotiating with prices, collecting money and giving change. With these activities combined, your child is gradually building confidence when handling money as a consumer and merchant.
5. Get them involved in budgeting
When your kids become teens and are more accustomed to the idea of spending money, it’s time to introduce another essential concept: budgeting. You can start teaching your kids what budgeting is by making your kids a part of your major purchasing decisions, like buying a new car. Explain to them that big financial decisions need planning, time and research. Let them ask questions so they can understand your reasons behind your choices.
To teach your child further, let him experience how budgeting works. For instance, ask him to create a budget for his school supplies. This way, he can also learn the difference between wants and needs. Another great idea is letting your child help you with your holiday plans. Here, he’ll be able to see different options for your trip and decide which fits your needs and budget best.
6. Open a bank account for them
When you teach kids about money, do not limit it to good spending habits. Saving money is just as important. So, when your child is old enough to make a small amount of money from simple errands or part-time jobs, take him to the bank to open a bank account and start saving. Teach him how to deposit and withdraw and explain how certain bank services can help grow his money. College may be too early to think about at this time, but letting your child save up for it will give him a purpose to continue saving.
7. Lead by example
Finally, kids emulate the attitude and behaviour they see in us. So, it’s best to practice the money habits that we preach. Also, don’t be afraid to share your financial difficulties with your children. See these as opportunities to help your kids become better money handlers and decision-makers!