One of the most beautiful things about kids is that they are curious. They want to learn about many things and as parents, we should take advantage of this while they are still young. Therefore, it’s not a bad idea to teach them about finances in the soonest possible time.
I read one parent’s question on our Money Thread — “how early do you teach your kids about the value of money” and if wondering about this, too, my answer is this: NOW.
While their money habits are formed when they reach the age of 7, you can start financial literacy at home as early as 3 years old — and guess what? It doesn’t have to be complicated and stressful!
Below are some of the easiest ways to teach kids about money:
Save Using A Clear Jar
I get it, piggy banks are cute but there’s nothing more satisfying than seeing your savings grow — literally! For example, they saved a dollar bill today and tomorrow, they have a few dimes to keep. This gives a clear visual that will help your little ones realize the value of money.
Set Yourself As A Good Example
You may not be a celebrity but your little one adores you 100%. You cannot even pee without your child banging on your door, right? All eyes are on you so be sure to set a good example on them, especially on your finances. You and your husband fighting about money? They see it. You using your credit card to purchase groceries and pay for dinner? They see it! And these things are more likely to affect their habits as they grow older.
Needs Vs Wants
This is my favorite tip as it works for me and my son. Every time we go to a toy store and he wanted something pricey, I tell him “that this Paw Patrol Set costs a hundred dollars” and that if we buy this, we’ll not have enough cash for food. It’s a simple discussion between needs and wants but it’s powerful enough to help them realize two things: first, knowing what our priorities as of the moment are and second, that it costs money to buy toys, food, etc.
Play Monopoly (Or Other Money Games)
Whoever said learning about finances can’t be fun has never played Monopoly (or The Game Of Life). These board games will not only keep your little one excited but also, it’s one way to teach them about financial literacy.
Give Money As A Reward
Money doesn’t grow on trees, we know that! And that we need to work to get the things we want. So instead of giving your kid money JUST BECAUSE, reward them with cash for doing age-appropriate household chores, such as putting toys back in the box, taking the trash out, and the list goes on. This simple idea teaches them that money is earned.
Kids love to play so there’s no better way to teach them about money than to participate with them in role-playing. Set up a grocery or burger store in your child’s playroom, add a cash register and play money, and start playing. This will not only take their boredom away but also, it helps them understand about finances using real-life scenarios.
What-Thing-Cost Guessing Game
Yes, another game on the list! As your little one grows up and learns more about small and big numbers, you are allowing both of you to discuss finances. For example, while walking in a grocery or toy store, let them guess the amount or cost of a certain item. Also, explain to them why some things are more expensive or cheaper than the others. Not only will they realize the value of money, but it will also help them understand what a good value is.
Start Talking About Budget
Let’s say they received money or gift card worth $20, tell them what they can buy from that amount. Help them understand about the budget and give them enough time to figure out what they want and if they can afford it — or better, save it for the meantime.
Stick To Your Budget And Avoid Impulse Buying
“I want that toy now. C’mon, mommy. Let’s buy it!” — if you’ve heard these lines before, don’t worry. You are not alone! Since kids usually use someone else’s money — a.k.s. YOUR MONEY — they don’t realize the value of cash yet. Therefore, instead of giving in to impulse buying, you can tell your child that they can have it as a reward for having good grades, doing household chores, etc. Also, help them understand if they NEED it or just want it.
Whether it’s a hard-earned reward or they received cash as a gift, teach your kids the importance of giving back. Help them understand why we donate to non-profit organizations or support their causes financially. Help them create a habit of giving back using a portion of their money every week or month.
These are just some of the best and easiest ways to teach kids about money. What’s your favorite tip? Do you have other techniques to help your little one become financially-literate? If yes, please feel free to share it on our community or in the comment box below.