Teaching kids about money is not as simple as teaching them how to count coins and bills or giving them a savings jar. In fact, more than learning the value of money, it’s about letting them know how valuing it actually benefits them.
In this article:
- Why Is It Important to Teach Kids About Money?
- When Is the Right Time to Educate Them?
- How Do We Teach Them About Money?
- What Is the Best Way of Teaching Kids About Money?
- Where Should They Start Putting Their Savings?
- Who Are the Best People to Educate Them?
Why Teaching Kids About Money Is Important
Why Is It Important to Teach Kids About Money?
Teaching kids about the importance of money allows them to manage their finances more wisely as they grow up. Managing finances is a skill, and the earlier children learn about how money matters work, the earlier they will learn to make better financial decisions. It is a good way of showing them the importance of earning, spending, budgeting, saving, and investing for the future.
When Is the Right Time to Educate Them?
Like good behavior, it is easier to instill financial responsibilities in kids at an early age, and it is best when they learn about these at home rather than anywhere else. At around seven, children begin to understand the concept of money and their financial skills start to develop. The earlier they learn to understand the concept of money, the earlier they become exposed to how the actual financial aspects of life work. When they make money mistakes while they are young, they will learn to how to do it right with proper guidance.
How Do We Teach Them About Money?
Teaching young children about money should not be overly complex. You may start with simple situations such as going grocery shopping with them. Explain to them how two different brands have different prices and why it is important to compare prices to get the best value, or allow them to choose between two things they really want to buy. This helps them weigh their options and think about the possible outcomes of their decision. You can also try these fun activities with your kids to teach them about money.
What Is the Best Way of Teaching Kids About Money?
One of the oldest ways of educating children about money is teaching them the art of saving. As important as teaching them how to spend money wisely is, it is also necessary to let them know how saving will help them build a financially stable future. There are a ton of ways to educate your kids about the importance of money. Start with these tips:
- Make baby steps by encouraging them to save from their weekly allowance using a piggy bank. Ask them to pick something they really want to buy and explain to them how important it is to save money for their purchases. It will make them realize how satisfying it is to reach a certain goal when they worked hard for it.
- Offer them ways to earn some money in addition to the amount they already have. You can do this by offering them a deal where they can get interest whenever they reach a certain amount of savings. The idea is to let them realize they can actually grow the money they have.
- When paying bills, explain to them how you work hard to pay for those utility costs. This is a great way to educate them about the concept of exchange as most of the things in the world are not free. It will teach them the value of everything they are paying for.
Where Should They Start Putting Their Savings?
When your child just starts school, the piggy bank is certainly a great idea. However, as they grow up, they will understand the importance of savings, especially when they are doing it for something bigger. You can open a bank account for them and explain how owning one becomes a huge responsibility. Giving them bigger responsibilities like this takes their financial management to the next level. Hopefully, it allows them to learn more as they go along.
Who Are the Best People to Educate Them?
Schools do not always provide specific lessons on teaching kids about money, so the best place for them to learn their way through financial management is in the home. It is extremely important for adults to be conscious about how we act towards money as children learn from these actions. They will adopt these beliefs and apply these when they have the capacity to manage their own finances.
There is a misconception that talking to kids about money is something serious and that they can’t handle it at an early age. Yes, money is a serious matter but they should learn about it as it is an important factor in living. What you can do is find ways to properly introduce them to it and slowly teach them how to effectively manage their finances. We hope that our guide will help you teach your kids about being wise money managers.
What do you think is the best way of teaching kids about money? Share your experience with us in the comments section below.