T:16 Teaching kids about money for the first time — A guide
Teaching kids about money for the first time — A guide
It is no secret that money and the knowledge of how to use it are imperative to do well in life. It is required in every sphere of life- from education to finding homes and building a family later in life. As a parent, you want nothing more than for your child to be secure and independent. This includes teaching them life skills that they need to survive. A good financial foundation ensures that they make smart decisions about money from a young age. This is where early lessons about money and spending come in handy.
Your kids follow your actions and copy them when they begin to learn. Does this mean that they also pick up the understanding of money and how it works like this? Absolutely. How you talk about money and how you choose to spend it is picked up by your child because they observe everything you do to learn socially acceptable actions. If you want them to make smart choices regarding spending and saving, you have to first show them that it is possible. It is imperative to display healthy practices and teach them about the value of money early. Many parents miss the chances to talk to their children about finances. But it doesn’t have to be that way for you.
When to start?
Start early. We emphasize this multiple times because research shows children as young as seven years of age have a basic understanding and form attitudes about money by then. If possible, take them along with you when you go to the bank or the ATM to become familiar with the places. Let them see you make purchases in stores with cash.
Let them hold notes and coins when they’re old enough to know not to tear them or put them in their mouths. By the time they learn how to count numbers, give them small denominations of money to add and subtract and let them buy small items on their own. These can be the right times to start a discussion about money and how to spend it wisely.
Fun ways to teach them about money:
When your child is about 3 years old and can understand instructions like “give me this and I’ll give you this,” it’s the perfect time to play imaginary store games to teach them the basics of the give-and-take system with money. Bring home play money or make your own play money from paper and cardboard. Exchange this play money that they give you with small toys, biscuits or fruits. This is a great way to mimic an actual in-store transaction.
As they grow older, actively involve them when you go to the market. Give them a small sum of money and ask them to pick products that can be bought in that sum. You can show them the bill and tell them how much was paid and how much was saved. At home, you can also pretend you’re in a restaurant and encourage them to pay the bill with play money. This also teaches them social behaviour.
Teach them how to save:
In all the transactions they see you perform, they might still think of money as something to just spend. Make it a good practice to show them how to save money. This can start from saving loose change they get from stores, or coins they find in the house. Allow them to learn from actions and words, so talk about how saving is important.
Encourage your child to start collecting coins as a hobby. Once they get old enough to start having an allowance, teach them how to save it in a piggy bank or jar. You can also take them along with you to the bank to open a savings account. This way, they’ll also start learning how banks work. Encourage them to deposit money in their accounts regularly and let them know when they can withdraw cash if they need it. This also instils a sense of responsibility and discipline.
Talk about budgeting and smart spending decisions:
Children will learn personal finance better when given some control over financial decisions. When they turn 12 or 13, you can start setting a weekly or monthly budget for expenses. Let them plan how much they want to spend and teach them how to keep a track of their expenses. Allow them to buy things like school supplies or food for themselves. Teach them how to differentiate between wants and needs. This helps them learn real-life skills of saving for bigger, more important things.
Now that they’re older, you can ask them to read the labels of products and compare prices. This will help them make informed choices about what they’re spending money on and where they can save a penny or two. You can also keep a chart of savings each week or month and put it up on the refrigerator or a wall in the bedroom. To encourage saving among siblings, you can make a small-scale monthly contest to check who has saved the most in their jars or piggy banks and give the child who saved more a small extra amount.
Giving matters
Talking about donating at an early age. Let your children know the goodness of giving extra wealth. With little practice and time, it can become part of their yearly activities. Help your children in their search for a charitable organisation or cause they believe in and allow them to donate an amount they deem fit. Giving instils social responsibility and makes them feel accomplished as they are contributing to social well-being.
Teaching children about money need not have to be an arduous task. With time and patience, you can teach your children to make wise financial decisions independently.
