Sad to say that money does not grow on trees. It has to be earned to be useful to people. There are many good reasons why parents should invest some time in teaching kids about money early in their lives.
Many children grow up not knowing the actual value of money, regardless of currency. That’s a bit of a shame because the result is that when they become adults, they tend to have money problems.
The Value of Money
Kids can’t grasp the value of money, but when they do, they want to have some, just like their mom and dad. Money can disappear very quickly if not looked after. Teaching children the value of money is essential. Take a look around if you want to show some examples of poor money management.
Forming Good Money Habits
Some families are lucky, they have enough money, and providing for their children and giving them whatever they need, including a generous allowance, is no problem. In fact, that is not how the world works and constitutes less than half of one percent of the world’s population.
Parents should teach their children to be tight with their money in uncertain economic times. Forced savings, putting that little bit away for a rainy day, will ensure you are better off than those who don’t save. Saving money is also important for personal growth.
The Learning Capacity of a Child
Kids are like sponges, and teaching them at a young age is a very smart thing to do. Impressionable, eager to learn, kids will learn lessons in life if taught properly. If you wait until they are teenagers, then they know everything, and whatever you tell them goes in one ear and out the other.
Children who are not taught the value and principles of money at an early age will more than likely be irresponsible in money matters. Did you know that children can learn a foreign language faster than an adult as they can pick it up and become fluent? Teaching kids about money is the same as they develop financial fluency. Teaching children from an early age how to save and budget in a fun and educational way can lay the foundations for sound money management later in life.
Recent research indicates that teachers and parents can have a positive influence on children’s spending and saving habits with as little as 10 hours of financial education.
Where do you start?
Demonstrate how money is exchanged for goods and services. Allow them to make their own purchase so they can see they are trading with the shopkeeper and receiving something in exchange for money. A good way, as an example, is to have the exact money for a product and give it to your child. Allow your child to hand over the money to the cashier. After you leave the shop, you can talk about how the money was used to pay for an item.
Tips for Teaching Kids About Money
- It’s fun – Make spending and saving a game of fun. If only spending money is fun then they will not associate any pleasure with saving.
- Saving Habits – When your child receives money as a gift for a birthday or Christmas, teach them the habit of putting some of it into a piggy bank or a savings account. This habit will more than likely stay with them as they grow and have their own families.
- Be Consistent – If helping around the house earns pocket money make sure the children actually do the work. Putting away toys and clothes and tidying their room are tasks that can be done by even very young children. A set amount on a regular day is a good idea, but you can encourage their entrepreneurial spirit by providing opportunities for them to earn more if they want.
- Cents and Dollars – Learning to turn off lights, saving small amounts, giving small donations to charity collections, these all foster positive habits that can last children through their lifetime. Ensure that you explain why you are doing it and what the benefits are. By donating to charities it shows your child that there are others less fortunate. They will get the idea that they should be grateful that they have more than enough.
- The Why and Because – Your kids are always asking for something and the first inclination is to say no. Rather than a flat refusal, ask them if they would buy it from their own money, and what the consequences are if they do. Don’t be surprised if they are reluctant to use their own money.
- Praise – We all know that praise reinforces positive behavior. Kids thrive on encouragement and by doing the right thing makes them feel good if acknowledged by a parent. Praise can be applied to spending wisely, saving whenever possible, and giving to charity.
- Use the Internet – There are hundreds of apps, videos, and games that teach children about money. Kids are very knowledgeable with technology these days and will find it easy to play computer games involving money.
An open and honest approach to money gives children a clear and constant message. They can’t buy everything, tell them why. By saying ‘because I said so’ as a reason to say ‘no’ to a request for money teaches a child nothing.
It’s important that you tell your child that family money matters are private and should not be discussed outside the home. Conversely, if you, as parents, speak in hushed tones about bills and bank statements, your child might think that finances are something about which to be furtive and secretive. In the same way, parents showing anxiety and stress over money matters can be picked up by the child and carried into their adult life.