Money education is crucial to youngsters’ financial success. Budgeting, saving, and smart spending may be taught to kids at any age. Financial education may help kids and teens make smart choices and become financially responsible adults. This resource covers money education for kids at different ages. We’ll start with money recognition and piggy banks for young children, then teach the importance of money, budgeting, and investing as they get older. We can help kids develop lifelong financial habits by tailoring our approach to their age and comprehension. This article will provide you with practical advice to help your child become financially secure, whether they’re in preschool or getting older.
Begin with some simple counting!
When teaching your child about money, it is very important to start from an early age, like age 3 and 1/2 years to 5 years. Teaching pre-schoolers about money first involves teaching them about basic counting. Give them coins and demonstrate by counting “one coin, two coins, three coins” on and on like that. Then, stack the coins according to their different denominations.
You will have to do this repeatedly for them to grasp what you are trying to say. Do not let counting be restricted to coins alone; you can count other things like sweets, fruits, biscuits, etc.
Since money is basically about figures, they will need to understand the basic idea of counting to be able to relate its importance to finances. Note that you should not leave coins with small kids alone, as they can swallow them. So please be very cautious about having coins lying around.
Make them understand what money is!
Kids often hear the word money but hardly understand that we have to work hard to get it, that it has value, and what happens when it is spent wrongly. They’re used to getting what they want, so in their understanding, it will always be there.
I read of a conversation between a man and his son. The son asked for something at the shop. When the father told him he didn’t have the money for it, the son’s reply was, “Just go to the bank, and they will give you the money”. How hilarious, but that’s the thinking of kids. They think there is an infinite supply of money in the bank or somewhere.
It is your job as a parent to let your kids know that money isn’t always easy to get, that sometimes you have to work hard before you earn it, and that you have to make smart choices to sustain the one you have so you can get more. Teach your kids the names of the different denominations you use, like rand, dollars, cents, and pennies, and use them in your daily conversations. Let them know that money is not just paper and that each denomination carries different values and worth. Explain the concept of debt, loans, savings, investment plans, etc. You do not have to teach your kids all of these at once.
Find strategic times to fix these important lessons in your everyday discussion with your kids. Note that you have to make your child also understand that he shouldn’t go about asking people how much they earn or the worth of the things they own, as it is quite impolite.
Introduce to them the idea of trade!
Teaching kids about money also requires you to teach them in simple ways; the concept of trading will help them grasp the importance of money. In fact, it is one way to teach your kids the value of money and make them business-oriented. You may ask, “How can I teach my toddler about trade when he is still trying to grasp basic things like wearing his clothes and cleaning his teeth?
Well, here is how you can go about it. If you are eating some cookies and your toddler asks for some, tell him to get the cookie jar so you can give him some (this way, he is working to get the cookie).
Or, if you both are drinking juices, maybe yours is an apple juice and his is an orange juice; if he wants to have some of yours, tell him to swap. You can only get some of yours when he gives you some of his. This will help your child start getting an understanding of trading, which is giving something to get something in return and working to earn something.
Play the money game!
A cool and fun way to explain money to your child is through money games like counting, playing fake store, life, monopoly, etc. For young pre-schoolers, you can teach them the basics of counting numbers and identification using coins. Also, teach them the value of each coin and arrange them based on their colours, sizes, and worth. For older children, you can teach them about money by setting up fake shops in your living room, their rooms, or in the dining room.
Display items like sweets, cookies, candies, shoes, clothes, etc., and put a price tag on each of them. Then they can learn about bargaining, making the right choices when shopping, budgeting, etc. It is important to teach the kids not to fix unreasonable prices on items. For example, if they fix the price of two pieces of candy, we all know it is unreasonable to make them aware that things have different worth, which is why prices vary.
Teach your child about shopping!
A lot is involved when shopping, from differentiating between the need and the wants to finding the right stuff to buy, getting good purchases, bargaining, etc.
A child needs to learn all these because it is part of financial literacy. When your child is a bit big, from about 3 years to 5 years and above, you can start taking him on shopping trips, not just to get things for him but to make him learn how to shop. Before you go shopping, a fun way to get your child involved is to work with them when writing a list. Ask your child, “What are those essential things we need in the home”? And you both should write them down.
Of course, he may mention some outrageous things, like lots of candy, toys, or clothes, even when we have enough at home. Utilize this opportunity to explain to the child the difference between a want and a need. Tell him that wants are extras like the sweets, more clothes, and more toys that he mentioned earlier, but they are not always necessary. But needs are the essential things we can’t do without, like food, toiletries, and other necessities.
And during shopping, it is good to strike a balance between the wants and the needs, which is why it is important to write a list. Also, tell the child that it is always important to shop It is important to shop with a budget. You can explain that budgeting is setting aside a specific amount of money for shopping and that whatever you buy should be within the budget. At the end of the day, you and the child should plan a list within your budget.
Then, take the child to the shop. At the shop, you both should discuss each item you purchase. Do not just pick items; make him see the reasons why you are picking a specific item. For example, you may have to go for a brand of tomato paste that has greater value compared to a brand that is popular. If your kids are big enough, give them some money and allow them to make purchases in one section of the store while you continue shopping in another section. When you both are done, you will know how well he has learned from all you have taught him. Do not forget to praise his effort and make appropriate corrections where necessary.
When paying the bills, you can give the child the money to pay and see if he can give you the correct change. This way, we experience first-hand how money is used and how to shop. I should also add that you should make your kids part of some important financial decisions in the home if you really want to go about teaching kids about money. For example, if you want to change cars or buy a new house, you can tell your kids about the plan; tell them to research about it and get back to you, and you all will compare and make the best decision. It is great.
In Conclusion!
Money education before age 10 can impact youngsters’ financial habits for life. Start by explaining money, its denominations, and its role as a means of transaction. Next, providing children with an allowance and helping them budget may teach financial responsibility. A savings jar or piggy bank may educate kids to save and motivate them as their funds develop. Teaching youngsters the difference between necessities and wants helps them prioritize spending. Shopping, comparing prices, and looking for bargains may teach youngsters wise consumer behaviors. Explaining delayed gratification and how waiting for something might pay off is another excellent lesson. Encourage them to save for charity gifts to encourage community service. Opening a savings account in their name might help kids understand banking and interest. Importantly, leading by example may be the best teaching instrument. As kids learn best by watching their parents, modelling good financial practices and having open discussions about money may greatly benefit their financial education. These methods can help parents teach their children financial skills that will set them up for lifelong success, responsibility, and independence. Early teachings laid the groundwork for financial literacy, equipping youngsters to make smart financial decisions.
In the following post, we will pick up where we left off with "To Be Continued."