Teaching children about money is an important topic that all parents should cover with their kids. It’s really important to start this work early as it will set a foundation for good saving and spending habits as they age. A lot of their attitude to money will come from what they see their parents say and do, but here are some top tips on how to teach kids about money.
16 Ways How To Teach Kids About Money
This is a collaborative post
You can start money conversations from a young age. Perhaps as young as two or three. Once your little ones can play interactively, you can use this to start to educate them about money and how it works.
Play Shop
You can teach very young children about money by playing shop with them. At this age it’s not about teaching children the ins and outs of handling money, it’s about them starting to grasp that when they want something from a shop, it has an exchange value. Small children love to play shop. Whether they are the customer or the shop keeper, they will soon understand that you exchange money for items bought in the shop. This can quickly be replicated when you take them to the local shop or supermarket.
Give Them A Piggy Bank
Once your little one understands a little more about money, you could think about giving them a piggy bank to save their money in. This could include the small change that you give them, money they get for their birthday or even, as they get older, money they may earn from completing household chores. They will enjoy seeing the money grow.
Let Them Spend Their Money
Once they have some money, it’s a good idea to let your children spend it. It’s a great way for them to learn with real-life experiences what exchanging money will get them. They will need to balance their desires of having money and wanting material items. They’ll also start to understand the value of money if you can show them that their money may only buy one or two items and they may have to choose the one they want most.
Play Money Games
When I was growing up, there were so many games out there that we played that involved money. We all wanted to win board games like monopoly where the winner takes all. There were also computer games where you had to collect money or tokens. Playing games where you have to earn money or tokens is a great way of teaching children how to work for what they want. There are also lots of other styles of money games that can be useful when teaching children about money. Take a look at this online game called Kingdom Wars. If you are like me and love monopoly, then you’ll love playing this.
If this game isn’t quite your cup of tea, why not try another style of money game – LEGO City Adventures Build And Protect. This is where you can build your city. It teaches you about budgeting, collecting rent and more. Plus it’s also LEGO themed, so it’s extra awesome!
Be Open About Money
Particularly as your children get older, they need to understand how money works. Being able to discuss money matters with the whole family is important. You don’t want your child to think that money is a never-ending resource and that they can simply have as much of it as they want. Explain to them that grown-ups have bills to pay and sometimes there just isn’t the spare cash to go around to buy all the nice things that we want. Children are a lot more able to understand these things than we give them credit for. Also teaching them to be open about money will help them to ask your advice when they are older about money matters. It also sets out good communication habits if they have a partner or someone they have to share finances with.
Give Them Pocket Money
Some schools of thought advocate children working for their pocket money, but then there are others which don’t. I’m on the fence as my children aren’t of an age where they need pocket money. Giving pocket money, whether earned or not, will teach children about budgeting and how to balance what they want with what money they have.
Teach Them To Respect Their Toys and Possessions
There’s nothing worse than an ungrateful child. By teaching children to value and respect their possessions (and by extension others’ possessions also), you will be teaching them to value their items. It’s important to guide children not to be materialistic otherwise they will grow up always wanting the next new thing. It’s hard as we live in an age where everything is available quickly and they are bombarded by consumerism from a young age. But gentle, constant reminders about enjoying and cherishing what they have will go a lot way to creating a contented young adult.
Compare Value
Once children get old enough to spend their money themselves, you may want to help them to understand value. With a lot of importance being placed on branded or designer items, it would be easy to fall into that trap too. If they are buying an item purely for the brand, then it might be worth reminding them that a lesser-known brand might offer better value for money, leaving them more money to spend on something else.
Teach Them To Save
From a young age, children should be shown the benefits of saving. If they want an expensive toy, they can be encouraged to pool any birthday money and pocket money to be able to buy the item. Also teaching them to save their money, especially if they don’t have an immediate desire to spend it is a wise choice. You can help them keep a tally of their savings. As they get older, you can encourage them to use earnings for part-time jobs to save towards their first car or even driving lessons. There are plenty of great things to save for as you hit your late teens.
Show Them How to Curb Impulse Buying
One of the easiest ways to waste money is to always give in to impulse buys. If you demonstrate to your child that impulse buys should be a rarity then they will grow up with the same attitude. By stopping, waiting a day or two, and then purchasing the item, you may find that you have changed your mind about the purchase all together. It’s a great money-saving lesson to teach kids about money.
Show Gratitude
Showing gratitude isn’t just useful for how to teach kids about money, it’s a life lesson which can be carried through in all areas of life. You should help teach your children to be grateful for all they have and not just material possessions. Showing gratitude for what they have got will help them to focus less on what they haven’t got. That way they can help themselves not to focus happiness on money and materialistic things. Gratitude journals have become popular in recent years but you don’t need to do anything as formulaic as this. Just thinking at the end of the day about the things you are most grateful for can do wonders for appreciating all you have.
Open Them a Bank Account
Once your children understand more about money and purchasing items, you might consider opening them a bank account. They can then choose to save or spend their money. A bank account is a very grown-up step. There are several bank accounts which are designed specifically for children.
Show Them the Value of Hard Work
It’s a great life lesson to show your children the value of hard work. Whether that’s working hard at your job or striving to do your best at home or in education. Hard work and always doing your best should be encouraged. Not only will it give them immense satisfaction at the end of each day, but often hard work pays off in terms of reward. Whether that’s financial or otherwise.
Help Them Budget
Budgeting is a tricky concept for children, but once they get a bit older, it’s good to teach them how to budget based on their income and their outgoings. It’s a valuable life lesson that many people don’t learn until they’ve got themselves into debt. You can help them budget with their income and outgoings when they get their first part-time job or perhaps when they go to university. Giving them a solid understanding of how to budget will help them in life when their outgoings get that much bigger.
Encourage Them to Earn Money
Encouraging your little entrepreneur from an early age is always going to be a positive thing. Maybe they like baking and want to sell some homemade cakes. Maybe they are creative and want to sell something they make. Maybe they are just a grafter and are happy to wash cars, walk dogs and babysit to earn extra money. There’s no harm in them having some extra cash from the tasks they do and it will instil a good attitude. Having a part-time job will teach them valuable skills which they can use when they look for full-time employment.
Educate About Debt
When you are thinking how to teach kids about money it’s important to tell your children about debt and how not to be drawn into credit cards and overdrafts. Explain how these sorts of companies make their money and why it’s never a good idea to spend more than you have. You should also be open with them and ask them to confide in you if they find in later life they do get into debt – as there’s nearly always a solution and sometimes it just takes a fresh pair of eyes to find it.
Teach Them to be Money Savvy
Children who are old enough to spend money independently are never too young to understand how to be more money savvy. It’s important to show them how easy it is to waste money and how sometimes, when someone tells you something is of great value, it isn’t always a good deal. You can show them how you find ways to be a bit more money savvy, like using discount codes when eating out as a family or shopping around for expensive items. Good habits that are taught early will stand them in good stead for their future. So here are some useful ways how to teach kids about money which you can refer back to time and time again. It’s your responsibility to bring your children up to be well-rounded adults and that includes valuable life lessons about things like money and finances. Here’s to a prosperous future for you and them.
Read more posts in the Parenting Category