Money is an important part of life and our everyday activities. Whether you are a young adult just starting out, or a parent with children of all ages, it is important to teach them about money. When considering tips for teaching kids about money, the most important tip is to talk about money openly and honestly with your kids. Let them know what money is, where it comes from, and what it can buy.
The concept of money can be hard to grasp at any age and even adults make costly mistakes. However, if you can instill good habits for spending and saving money in a fun way, children will be more likely to take their financial responsibility seriously as they grow older.
Teach them the value of money and that money is a resource that can be used to buy things they want. When your children are old enough, teach them how to save their money and make it grow by not spending it all at once.
Start with the basics of money and finance
How you introduce money to your children will partly depend on their age. A good place to start is getting children comfortable handling cash and coins. Explain to them how money is used to buy things and that it must be earned before it can be spent.
Setting up a savings account for a young children will help them learn more about money management. Being able to see their money increasing through interest payments will help them understand the benefits of saving money. Talk about their savings goal, whether it be a new toy or a computer game and encourage them to save up for it.
Speak openly about small financial decisions
Start getting your child involved with minor financial decisions from an early age. Discuss money lessons such as which brands and items to buy when shopping. This way your child is able to understand the decisions you make while also feeling in control of certain financial choices.
Older children could also help with budgeting while shopping if you ask them to keep a running total of the items you buy. Not only will this help their maths skills, but it can also help them to understand how small items can still add up in price and not everything is affordable on a budget.
Try simple games with younger children
Creating easy monetary games such as counting pennies can help your child understand the value of different denominations of money. Try using a pile of 1p coins and asking your child to match the number of coins to the price of a higher value coin, such as 10p or 50p.
Play money is always safer for small children to play with! Monopoly is one of the best board games to play with children to help teach them about personal finance.
Set a good example with your own finances
There are no two ways about it, children learn money habits from their parents. Showing them small activities, such as checking the receipt after your shop or putting money into savings can start developing positive habits from a young age.
Encourage your child to ask questions without repercussion in this setting. While you might not necessarily have all the answers, opening up a dialogue about family finances is a healthy way for your child to learn more about finance.
Use pocket money as an incentive to save money
Using pocket money as an incentive to do chores around the house not only helps you, but it also helps your child learn more about the value of money and what it takes to earn it.
Creating a simple plan with a small allowance for different tasks, along with caps per week or month, is a great way to help your child start understanding where money comes from.
Teach children that actions have consequences
With utility bills increasing, there’s no better time to teach children how a household works. Reminding them to turn off their TV or games console after use will not only save you money in the long run, but also teach them about bills and the impact on the environment.
They will also learn about the importance of sustainability and saving the environment, too. You could even go further and show them what the numbers on your gas/electricity meters mean, to show them how energy bills are calculated.
Money management for kids using pocket money
Alongside teaching children, the relationship between work and money, household chores and pocket money is also a great opportunity to show children how to save.
If your child has shown interest in a more expensive purchase, you could set them up with an old-fashioned piggy bank where they can ‘deposit’ their earnings or create a chart for them to fill out so they can track how much money they have. Help them understand that by completing an extra chore will result in extra cash for them.
Organise trips to the shop to learn about saving vs. spending
Another practical way to teach a child about the benefits of saving is by visiting shops and grocery shopping. Allow them full control of their own money on the understanding that if they don’t have enough, they won’t be able to borrow any more.
The more they feel in control of their own finances, the more they will be able to make sensible decisions when it comes to spending or saving.
A shopping trip is a great idea for teaching kids how much things cost in the real world. Creating a shopping list beforehand will help children keep track of the remaining balance used for household items.
It will help them realise that treats not mentioned on the list also need to be factored into financial planning. This is one of the easiest tips for teaching kids about money!
Set up a current bank account for older children
There are a whole range of online tools for teaching older children about online banking and using cards for payments. There are bank accounts available for teenagers that come with a debit card, with a limited amount of features and caps on what they can spend.
Older kids will appreciate the financial independence of their own bank card, especially when they want to go shopping with their friends.
Teach older children about selling old toys for extra money
Teaching young adults about ways to earn money for themselves is a helpful alternative. When they’re old enough, you could ask your child to go through their old toys, books and clothes and set aside which ones they’d like to sell.
You can then sell these on their behalf through online auction sites such as eBay or Facebook Marketplace. Not only is this a great way for your child to feel independent in earning their own money, it presents an opportunity to also discuss how to use the internet safely.
Final thoughts on teaching kids about money
It is a really good idea to teach your kids about money from an early age. By doing so, you will help them to develop good money habits and be more responsible with their finances.
There are many ways to teach your kids about money, and the tips for teaching kids about money in this article are a great place to start. So what are you waiting for? Start teaching your kids about money today!