It’s never too early to introduce the concept of finance. For example, families can play games that demonstrate cash transactions. They could also set up a household piggy bank to familiarize themselves with the practice of saving. There are so many ways for parents to teach children about money. Since April is Credit Union Youth Month, we filled this article with five fun ideas to get started.
Why learning about money is important
It is essential to teach children about money because it will give them the power to make better financial decisions, especially during an emergency. Poor choices are usually the result of either a lack of time or knowledge. By engraining a solid set of values regarding currency, your children will be able to process situations clearly and stick to their best money management techniques.
According to a Cambridge University study, children grasp the basic concept of money by age three. Additionally, most experts agree that kids need to understand the value of the dollar long before they are adults. “If you do not teach your kids how to manage money, somebody else will,” stated financial guru Dave Ramsey. Besides, displaying responsible spending habits while children are young provides them with a lifetime of benefits.
1. Speak about the difference between wants and needs
Kids will be kids, and when they see something they want, they are prone to ask for it. It’s a parent’s job to explain that choosing needs over wants is better for a budget. Having an occasional reward is okay; however, only after paying for all needs first.
2. Set up a pretend shopping trip
Set up a pretend store in the living room and give your child a mock budget. This game works best when the items for sale come from different categories, like food, home goods, or toys. Say, “With your five dollars, please buy me one piece of food and one of something else.” Your child will have fun making different combinations while solving simple addition problems.
3. Let your child conduct a real-life transaction
After the pretend lesson, now it’s time to go to an actual store. Give your child between 5-10 dollars and 1 item request. They can purchase whatever they’d like with the remainder of the cash. When it’s time to checkout, let them be the ones to hand the money to the cashier. Seeing their decision-making skills in progress will give them pride, and allowing them to handle the situation will provide life experience.
4. Open a Kids Make Cents account
Teach your kids a lifetime of smart money habits. Catering to children ages 0-12, Achieva Credit Union’s Kids Make Cents accounts are interest-bearing. They have special incentives, like quarterly statements and a 1st-anniversary reward. To apply, visit our saving and investments page here.
5. Allow them to earn money
What better way to fill your child’s Kid Make Cents account than by letting them earn money? Start by giving them small tasks around the house, then increase responsibility as they get older. Earning money is not automatic; they have to do a satisfactory job to receive their pay. Consistency is the key. If you want to teach children about money, try this all-hands-on-deck approach.
Teach children about money and finances
Setting the tone for financial best practices starts early, and everyone approaches it differently. As families navigate the money talk, there’s excitement in the process. Stay tuned for more helpful articles as we continue with the remainder of Credit Union Youth Month.