When it comes to teaching children about money matters, it’s never too soon to start. The earlier you begin, the sooner kids will come to understand that money is a means to an end. It is imperative to teach them about the value of money before they develop poor spending habits along with the importance of working to earn a living.
For Younger Children
Games are one of the best ways to introduce a fun element of teaching younger children priceless money lessons. Encourage the child to set up a “store” with toys or groceries for sale and take turns playing cashier and customer. Use play money to make a purchase according to the price marked on the tag by the child. A great experience for little ones, take them to the supermarket with you. Put them in charge of spotting items that you need to buy and allow them to guess the cost. Not only will they get useful tips on saving, they will learn about discounts and sales.
For Older Kids
Older and mature children should be given greater responsibility and permitted to take a more active role in the household finances. While spending one-on-one time with them, discuss family wealth building openly and honestly. It is a good idea to explain to your kids how you budget and save, while making them aware of monthly expenses such as mortgage or rent, car note, college funding, medical, and food. Teaching children to maintain a record of money spent will instill financial discipline and encourage them to save. For hands-on application, find areas where you’d be comfortable involving your kids in financial decisions. For example, when it comes to a major expense like purchasing a car, get your kids involved in the decision making process.
For Kids of All Ages
Make saving a habit for kids of all ages. They should be saving part of their allowance, birthday money, and earnings from work. To encourage saving, introduce a system of interest earning on the money the child saves at home. Older children can even be introduced to investing in the financial market using real money. This will promote the habit of saving rather than spending.
Encourage saving by giving an allowance in smaller denominations rather than a large bill. This way, the child will be encouraged to put aside a couple of dollars for saving. For older kids, open a savings account in a bank. Let the child withdraw a little of the money from time to time so as not to discourage him or her from saving.
Saving money, making it grow, and spending it prudently are some of the things children should learn how to do. Teaching children that a want does not necessarily mean buy, differentiating between needs and desires, and encouraging them to make notes of the money spent in a month helps. Even if they make mistakes, encourage them to make healthy spending decisions. As a result, they will learn to handle and manage money in a responsible and mature manner as they grow.