Teaching Kids About Money: Fun Ways to Educate Your Children

Your child’s mind is continuously evolving and maturing as they grow. Teaching your children about managing money from an early age lays the foundation for prudent financial decisions later in life. It’s easy to educate your children about being wise around money, irrespective of their age. Keep reading for fun and practical ways to give your kids a financial head start.

Introduce money.

Kids, especially preschoolers and little kids, need to understand the importance of money. Talk to them about the concept of money and purchasing power. A simple way to explain money to them would be to tell them how mommy and daddy work hard to get money, which is how we get money to buy food, toys, and clothes. This will reinforce the concept of cause and effect and help their little minds understand the significance of money. For little kids, consider board games that introduce key concepts such as buying, selling, saving, etc. There are also interactive videos online that teach kids important concepts about money in a fun and easy-to-understand fashion.

Hands-on learning

Little kids learn well when they actually get to do things on their own. A piggy bank is a time-tested way to introduce your kids to money. Use a clear jar and let your kids collect money in it, which they can call their own. The clear jar will help them visualize how much money they have, and see it grow over time. This is also a great way to introduce young kids to the concept of saving money and expanding their fortune.

The next time you’re going to the store, have them grab a couple of dollars from their collection and hand it over to the cashier at the check-out. This will help them realize that you actually need money to pay for daily essentials, and is a great way to establish healthy spending habits.

Curb impulse buying.

Learning to spend wisely is the key to a secure financial future. Once your kids reach middle school, they’re old enough to realize the value of money and determine if the things they desire are worth the cost. Older kids will often make demands for new toys, gadgets, and fancy clothes, owing to peer pressure or the influence of digital media. This is a great time to explain to them how to spend rationally instead of being driven by emotions. For example, if your child insists on an expensive toy or gadget, point out the cost of the item, and then weigh in if the toy or gadget is really worth the price. This will instill the values of mindful spending and help kids make informed buying choices.

Offer commission.

Money needs to be earned and doesn’t come for free! This simple theory will make kids realize the value of hard work and money. Pay them a commission for doing common household chores such as cleaning their room, mowing the lawn, etc. When kids earn their own money, they learn the basics of how to manage their funds, which helps build their money management skills for the future.

Teach them the basics.

Children between the ages of 11-18 are eligible to have a bank account, and opening one is an excellent way to introduce your child to the basics of managing a savings account. Once they reach teenage years and are earning little on their own, encourage them to make regular deposits to the account. Teach them the concept of compound interest and tell them how their funds in the savings account will accrue gains over time, growing their wealth. Managing a savings account and seeing their money grow may encourage your teen to learn more about investing in stocks, mutual funds, etc. Direct them to the reputed investment gurus on LinkedIn or some other teen-friendly digital resources, so they can read up more on the nuances of smart investing and prudent money management.

Encourage your kids to earn.

To become good money managers, it’s important to allow kids to earn some on their own. Encourage teenagers to work summer jobs to earn some cash, or help your kid put up a lemonade stand that will teach him the basics of working as a dedicated employee or running his own business. Help them invest a part of their income to show how to balance expenditures and savings. Having kids earn on their own also allows you to explain the concept of taxes, and tell them more about efficient ways of tax planning and investing.

Highlight the importance of giving.

Help your kids foster an attitude of empathy toward the less fortunate by encouraging them to donate a portion of their income. Once they make a little money, pick a church or charity to donate a part of their income. This will help them appreciate the value of money, and realize the joy of giving.

Teach them about budgeting.

Planning how to allocate money and spending it wisely is part of their learning process. If you’re planning a major family event such as a family vacation or a cruise, get the kids involved. Use websites and apps to track the price of tickets, hotel booking, etc., which tells them how to factor in various expenses when planning a significant project. Ask them to compare costs on different days and book only when the price fall to a substantial low. This will show them that they need to find good deals to save money, and it’s possible to work around a budget to complete essential tasks.

Talk about long-term planning.

A financially sound future comes from smart investing and long-term planning. Introduce this vital concept to your teen by discussing the cost of college fees and how to plan for this major expense. Help your child research more on financial aid and learn about scholarships, so they know what to expect when it comes to funding college fees.

Conclusion

Imparting financial lessons to your children is crucial to their long-term success in life. Teaching your child to be responsible with money is a key responsibility of being a parent. With our tips and techniques, it’s now easy to get your child started on learning the basics of how to deal with money.

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