9 practical ways to teach kids about the concept of money
It is important to teach kids how to value money. Be a good role model, and ingrain good spending habits early on.
As parents, it's important we teach our little ones about money. With little ones, you can start with simple ways on how to collect money in a piggy bank.
Older ones should learn how to open a bank account, and saving a bit of their pocket money. Understanding how to value money teaches kids about the real world. It helps them make decisions on what to buy and what to forego.
According to a study done at North Carolina State University and University of Texas, communicating with children about money, is key. Conclusions from the study: "The takeaway here is that even young kids are aware of financial issues, regardless of whether parents talk with them about money.
If parents aren't talking with their kids about subjects like family finances or debt, the kids are drawing their own conclusions -- which may not be accurate. Even if parents don't want to discuss family finances with their children, it may be worthwhile to explain why they don't want to discuss that topic."
Its never too early to get started. Here are 9 simple ways to go about it.
#1 Use a clear jar instead of a piggy bank
Many mums get fancy piggy banks for their kids to save money. Yes, they are great, but a clear jar serves the purpose. A clear jar allows kids to see how the money is growing: from a few cents to dollar bills. Discuss with your kid the value of saving and encourage him to save whenever he can.
#2 Say no to plastic
Little kids are watching you when you are out shopping. When you use a credit card, they see it. Remember to use cash whenever possible, so that kids realize that they can only spend what they have. If you set the right foundation, they will follow it when they get older.
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#3 Teach them about opportunity cost
Teach kids that if they can buy one item, they need to forego something else. This allows them to value what they have, and let go of what they don’t need. For instance, “if we buy a toy today, we will not have the money to buy the book tomorrow.” They need to know the difference between needs and wants.
#4 Giving is important
Kids need to learn how to give. So once they understand a little more about money, take them to a local church, charity to donate some money. Besides money, they can also buy books and toys and donate to an orphanage to understand the values of sharing.
#5 Hunt for good deals for your kids
Teach your kids about saving money by looking for good deals on purchases. For example, when you visit the grocery store, hunt for deals and explain to your kids about them. Encourage them to hunt for deals for their favorite item like yogurt, raisins and other items to keep them interested.
#6 Tell kids the truth
Talk to kids about money. If there is a financial crunch at home, let them know that we need to save as a family, which means fewer toys and gifts. This will allow them to understand the realities of life. Kids need to know about the financial realities at home, and that money doesn’t grow on trees.
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#7 Give them an allowance
For slightly older kids, give them an allowance. Allowances mean a limited amount of money to spend every month, letting them value what they have. Some parents like to link allowances to chores done, but this might not be a good idea. Rather teach money discipline, by encouraging savings to be a part of their allowances.
#8 Model good spending habits
A good way to develop sound spending habits is by exhibiting them. When you plan a trip to the grocery store, ask your children to make a list and stick to it. This prevents impulse purchases. For kids who are older, show them how to compare prices of items online, and research before buying.
There will be times when kids will make mistakes with money. For instance, he might bully you into increasing his allowance to cover for a big item purchase. Talk to them on how they can save better to buy an item they need. If they lose money, make them realize the value of keeping money safe. The way you communicate plays a vital role in teaching them about money matters.
Parents, can you share any other ways to teach children about money? Share with us below!