Lessons About Money You Can Start Teaching Your Kids Today
We will dedicate this blog to a very important topic – teaching young kids about money matters. Close family members are, in most cases, the most influential force in any child’s life, and research shows that this extends to financial literacy – yet the money talk still doesn’t happen in many households.
Financial skills are so crucial these days, so the sooner parents start taking advantage of everyday “teachable money moments”, the better off their kids will be in their adult life. Below, you will find examples of some fun activities you can get your kids (as young as 3) involved in that will help them get an understanding of financial basics.
Start teaching them about money, value and having to work
- Identify coins and their value, and explain that some things are free, and some items cost money
- People earn money by working: tell them about your or your partner’s job and point out other people working while you are walking around your neighbourhood.
- Teach them that they have to work to earn money: although some parents may not agree with this strategy, consider giving them chores that will be associated with money. Pay them instantly after they do the chore, and put the money in the piggy bank: eventually, the child will develop a sense of ownership over the money in the piggy bank, which will create positive feelings around saving.
- When they are old enough to work, offer and encourage ways to earn money on top of the household chore payments: for example, by mowing lawns, doing paper runs or holding garage sales.
Explain that sometimes they have to wait to buy an item they want and how important saving is
- Get your child to set a goal, such as buying a toy or a book, something that is not too pricey. Every time they put coins into the piggy bank, help them count how much they now have and how much more they need to reach the goal. Once they have saved up enough, take the money to the shop and let them pay for the item.
- Encourage them to start saving at least 10% of their allowance or pocket money.
- Open a savings account for your child early on, and start putting in a few dollars every pay. When they are a bit older, explain how compound interest works and start taking their savings to the bank to deposit it together.
- When they get older, consider paying for the household chore on a weekly or fortnightly basis instead of instantly, to teach them about pay days.
Teach about making smart choices about how to spend money
- Include your child in some of your small financial decisions. For example, at the grocery store, explain why you pick one item over another.
- Give your child a few dollars and let them choose which fruit to buy.
- When shopping together, ask yourself aloud: do I need this item? Would it cost less somewhere else?
- Explain that it’s important to shop around and compare prices before making a purchase.
The Money Week website has lots of fun resources like My Money Style quiz for tweens, so check it out for more tips on financial education for our kids.
Sources: http://moneyasyougrow.org, http://www.forbes.com, http://www.lifehack.org