Money — one of the most important aspects that define our way of life in so many ways; yet it is something that we avoid talking about with kids, especially younger ones. The other day, my 5-year-old son said to me, “Mumma, just go to the ATM and take out money” after I told him we can’t buy everything we want and need to handle money carefully.
It was then that I realised it was time to explain to him where the money comes from and what is its real value. Indeed, one of the greatest life lessons a parent can pass on to their child is to teach them the true value of money. And when we talk about 21st-century skills, financial knowledge and understanding are some of the most crucial life skills.
Guide To Teaching Your Child Lessons About Money
But if you are not sure where to start, here, I am sharing some simple and practical ways by which you can teach your child lessons about money.
1. Introduce The Concept Of Money
The best way to teach kids lessons about money is to give them some. Moving beyond only conversations to real money will give them some first-hand experience of handling money and understanding the consequences of saving or overspending.
Introduce young kids to coins first. Teach them the value of coins and encourage them to save their coins in a piggy bank; better still, instead of just having one piggy bank for your child, get three and label one ‘spend’, one ‘save’ and one ‘give’. Kids, especially young ones, need tangible ways to understand abstract concepts, so it’s important to not just explain these three money principles, but give them concrete tools to practice them. At first, this will probably be small amounts of pocket money, but in time this could teach them how to save money towards something they really want.
2. Use Cash
You can introduce even very young children to the idea of money through simple activities like shopping. Make cash purchases, and let your kids help count the money. Use coupons to teach them about ‘discounts’ and ‘savings’ at the same time.
3. Make Learning Fun
To get started, you can use play as a medium. Money games like Monopoly are helpful in starting the dialogue and encourage learning. Online games and homemade games are all possibilities. For example, pretend play games can be made around supermarkets with a buyer and seller role play. You can even help your child design their own currency notes and instil the basic understanding of money while playing.
4. Create A Budget Together
I have found that the best way to teach kids about money is to bring them in on family budget discussions. Kids naturally want to emulate their parents so they will start to think about spending and how to minimize it. During festivities or gifting season, allow your kids to plan to practice their budgeting skills. Help them also understand the opportunity cost of spending money on one thing, that may keep them from having enough money for other things.
5. Talk, Talk, Talk
More often than not, we avoid talking about money with kids assuming that they will not understand. In reality, Kids are very observant and will learn many of their money concepts by watching you and copying your behaviour. Be it using a debit card at the ATM or paying for groceries, or even writing a cheque – explain to your child what you’re doing.
I let my daughter sit on my lap while I pay the bills or check on my bank statements. Everything is digital now so it’s less tangible for kids, but she knows I am working around numbers while making some calculations and is happy to be a part of it.
Also, even at a young age, kids should understand how we’re getting the services and products we’re receiving. So talk with kids about service providers they see on a daily basis and how services are rendered in exchange for money (salary or wages) like the cook, maid, dhobi, driver.
6. Open A Savings Account
Several banks offer special savings accounts for young children. Some accounts also offer debit cards and cheque books when your kids get a little older. This can be a good way to show how saving in a bank can help your money grow, and teach children how interest accumulates.
Teaching your child how to save and spend wisely can shape his or her future attitudes toward money. Ending financial literacy merely with the wise old saying “Money doesn’t grow on trees” is not a great idea for millennials who are raising 21st-century kids. Imparting important lessons about money, including saving strategies and money-management skills, is crucial to help children achieve long-term success. And I hope the practical ways I’ve listed come handy when you teach your child lessons about money.