Have you ever wondered how to go about teaching kids about money? You’re not alone. As a parent, it’s essential to help them learn these lessons at a young age. The key to effective education is to keep students interested. Children learn best through practice, games, and activities. They are open to learning when they find the lessons fun and interesting.
This can be a daunting thought for any parent. Of course, money is an essential topic for parents to discuss with their kids, but it’s easier said than done. It’s quite the opposite.
Research conducted by the University of Cambridge, called Habit Formation and Learning in Young Children, shows that children as young as four and five can learn through constructing cause-and-effect explanations while interacting within their environment. a)
That means that it is an excellent time to start any. Whether we like it or not, before we know it, kids will grow up and take on the world by themselves. Below is a list of practical ideas to give kids the skills they need to manage their money in a fun way!
How To Have Your Kids Learn About Money Without Them Knowing
You can always read the phrase: start them early. Maybe you have wondered about it, but the truth is that children learn through resolving, observing, mimicking, and experiencing things. Whatever they discover, they know till the age of seven.
Age Four to Six
So, if you want to teach kids about money management, starting with simple lessons at four is best. Have you ever seen a kid happily counting up to ten coins? That is as good a lesson as any at that age. Next, you can use a toy cash register and set up a pretend play grocery store with prices and items.
If your child is good at listening, you should explain that goods cost money, and each decision will leave them with fewer coins in the money jar. The point is to teach them at this age that money doesn’t fall from trees and whatever they buy costs.
Age Six to Fifteen
You can move the pretend-to-play grocery store into the real world when they reach middle school. Take them grocery shopping and explain in simple words why you make certain decisions, how you can save money on items you buy, and finally, which items need savings. But, of course, that means explaining the expensive things that cost more and how to save for them.
This is the best time to encourage them to be a part of family financial decisions. For instance, if you are set on buying a new washing machine. Task them with doing the research based on your requirements. Not only will they help you and understand how much it costs, but they will also gain confidence and independence.
Depending on your child, you can introduce the concept of credit cards. Naturally, you want to explain that behind plastic, there is always debt that can have severe consequences for them in the future. You can try explaining by borrowing money to buy candy. If they do not return it, you add interest. Tell them how their candy now costs more each month than they thought. Learning from mistakes is perhaps a good life lesson that will hopefully never repeat.
Age 16 to 18
Finally, by the time they are 16, they already know the basics, and you can move on to lessons on investing. For instance, if they want some big items, you can get them to do chores for you and take 10% of their pay. Of course, in the end, you will give it to them all at once by the time they raise enough money. But, the point is to make them realize that the gratification may or may not come later.
Ideas to Help in Teaching Kids About Money
The goal of teaching kids about money is to use age-appropriate stages. It’s important not to overwhelm them or force them to learn. The game’s purpose is to let it pass like a conversation, play pretends, or something you entrusted them with. If they are not interested, you have to find another way. Speaking of which, here are some ideas you can use to teach kids about money more efficiently.
Teach Your Kids to be Happy With What They Have
Teaching kids about money starts with gratitude and happiness. A happy child is always ready to accept other lessons in life. That means embracing humor, curiosity, and creativity with your child, encouraging creativity, and making your child a part of household decisions, whether it’s a room redecorating or a new fridge. Creativity sparks critical thinking and problem-solving, which are essential to money management skills.
It all starts from home. Although you might think it has nothing to do with money management, it is very closely connected. Let’s face it: if we always want more than we need, we’ll always be unhappy. Of course, we’d all prefer a bigger house and a more expensive car, but those things don’t necessarily make us happier. The opposite is true—research shows that people who spend their money on experiences rather than material goods are more comfortable in the long run.
So teach your kids to save up for something they want instead of spending it all at once on something frivolous (and just as quickly forgotten). They’ll learn how to plan and work hard towards their goals—and they’ll be able to appreciate what they’ve got while doing so!
Teach Them How to Manage What They Already Have
Saving is one of the best lessons you can teach your kids. It’s very beneficial for their future. Not only does it give them lessons in budgeting, but it also teaches self-discipline, delayed gratification, patience, and planning.
Encouraging your kids to save can make all the difference in their financial responsibility in the future.
They are teaching them the benefits of saving money and encouraging good financial habits by helping your child find ways to manage what they already have. However, each saving starts with the goal. So you need to find out what they want and entice them to save up for it.
You can use a piggy bank for younger children, and once they turn eight, you can move on to a more engaging version and take advantage of apps such as BusyKid. It has a prepaid debit card and app that enables parents to move funds to their children’s cards and allows them the interest they choose on any money they save. This will make saving more appealing than spending as soon as possible (often with young children).
There is a well-known saying that it does not matter how much you earn, but what you do with that money. Kids are known to mimic their parents, so whatever you do while shopping with your kid, remember they are watching you and will repeat the same in the future. Use this time to make intelligent choices and spend wisely.
Play Games Which Teach the Value of Money Like Board Games or Cards
Any child that enjoys games can learn about how money works through games. There are many ways to inspire them through toys, board games, and cards. The goal of each game is to show the value of money and how that relates to buying things with it. In addition, you can use play money to teach kids valuable life lessons.
Want to learn how to play with your kids? We will discuss different games and activities further in the text below about the ways that help teach kids about money.
Encourage Your Child to Have a “Want” List And a “Need” List
It’s no secret that kids love to ask for things, and it’s also no secret that parents can often struggle with how to answer those requests.
But sometimes that means saying no to things that they want. It’s a tough job! But it’s also one of your most important jobs: keeping your children safe from making bad choices that could hurt them in the future. So how do you do it?
The answer is simple: encourage your child to have a “want” and a “need” list. This will help them learn how to prioritize their wants and needs and make the right choices for their development.
A want list is just that—a list of things they’d like to have but don’t need. Maybe it’s a new toy or book or game. Perhaps it’s something silly, like an animal costume. This list should be full of fun things that are unnecessary for daily life.
A need list differs from a want list because it contains necessary items like food, clothing, bills, and education that children need to live comfortably in society today. It might not be fun for your kids to think about these things when they’re asking for something they want instead.
Allowance Does Not Equal Entitlement – Chores and Tasks
It’s easy for kids to think that just because their allowance is coming in, they should be entitled to certain things—and that’s not how the world works! So if you want your kid to learn the value of hard work and money, you must ensure their allowance isn’t just given out freely.
The truth is, an allowance is not a right. It’s a privilege that comes from hard work—and if you want to teach your child that money doesn’t grow on trees, then you need to make sure they understand how hard their parents worked to make their allowance possible.
That’s why many parents give kids chores and tasks that aren’t just about cleaning up after themselves but about helping out in other areas of the house: washing dishes, taking out the trash, washing the car, and maybe even cleaning the lawn!
When you make your kids do these things for you, they’ll learn how much work goes into earning a living—and how much harder it is than just getting an allowance every week.
You can teach your children the value of money by giving them an allowance for chores they complete. But don’t just give them money because they ask for it—teach them that money is earned and not accessible. By learning how to handle their finances, kids will be better prepared when they leave home and start making their own decisions about spending, saving, and sharing their earnings.
Take The Kids Grocery Shopping With You
Grocery shopping with your kids is a great way to teach them about money management and why you make the choices you make when purchasing items. For example, you can show them that buying an apple over a bag of chips doesn’t mean you don’t love them because apples are healthy. You can also explain that buying one item instead of the other will help you save for something bigger (like a bike).
It’s a great way to get them involved in the process and help them understand why we choose one product over another. We know. We know. You’re busy, and it’s not always easy to find the time to take your kids grocery shopping with you. But it’s worth it! The grocery store is a perfect opportunity for kids to learn about money management in a real-life setting. Here’s how:
*Teach Them Why You Purchase One Thing and Not Another
Sometimes it’s hard for kids to understand why we choose one thing over another. For example, a Walmart cereal box can be $1.93, $3.78, or $5.98. What do you prefer? Why pay more for the same thing? We do this automatically, and kids don’t grasp the concept.
Talk to them about it. This teaches your kids that sometimes paying more means getting more value out of an item—or it might just mean paying more for the things we like!
Use this as an opportunity to explain that different products cost different amounts of money because they’re made from various things—and some things cost more than others! For example, if you’re buying organic apples, you might explain that the apples were grown using fewer chemicals than non-organic ones would have been.
* Teach Them About Budgeting
You need to budget for groceries before you go into the store, or else you’ll end up with more stuff than you need—and your kids will do the same! So talk to them about what you can afford and what can’t wait until next week (or month). Explain why you have limited funds with you and what you hope to achieve.
You can even try planning a week’s meal plan and purchasing only the necessary items. Then, you can involve your kids in the process and explain that it’s suitable for the budget while they choose meals themselves.
If you use coupons, get them involved and elaborate on what the piece of paper will get them in the store and what it would cost without the coupon.
* Show Them How Much Things Cost by Using Pennies Instead of Dollars
There are times when young kids do not understand how much something costs. You can use the jar and put pennies instead of dollars. For example, count eight dollars in pennies when your child asks why she can’t get that $8 toy and put it in a jar. It’s a trick, but it will give them something to think about, whether or not eight is a small number significant in this case.
*In the End, Let Them Choose One Food Item of Their Choice From the Gondola
Getting one snack of their choice is not so much about budgeting as it is of limitation. It teaches them that there are limits to what you can buy. In addition, they choose themselves, which gives them independence in making decisions. Whatever they decide, there is no going back.
We all know our choices have consequences, and this example only shows it. If they don’t like it, they choose it themselves. Those moments of independence will stay with them forever. It’s a lesson in teaching kids about money without realizing it!
Have Your Children Involved in Planning Family Budgeting
There’s a reason why they call it “family budgeting.”
It’s because you need to be involved in the process. The best way to get your kids involved in budgeting is by sitting at the table with them and discussing what they need for school. Then, you can discuss what the entire household needs.
Your children can be an integral part of the process, and they’ll learn a lot. For example, they will see how much money comes into the household and how much goes out. It’s also an excellent way to show them that you trust them and want them to be responsible with money.
If you want your kids to be involved in family budgeting, there are a few things you need to do first:
1) Sit at the table as a family and discuss what each child needs for school supplies, clothes, etc.
2) Discuss what the entire household needs such as food, unexpected expenses, and pressing bills.
3) Discuss whether or not you have enough money to cover these items or if you need to save more before spending on them.
4) Once you’ve agreed on how much money you must spend and what needs to be purchased, make it clear to the entire family.
5) Have each child write down their list of necessary items so they can see how much money they’ll need for school supplies as well as other things such as clothes.
6) Allow them to decide what is the most pressing item from their budgeted amount.
7) Discuss what the kids learned from this experience when you’ve finished. Let them be creative and make their solutions.
As your kids’ age, you can involve them in planning the vacation with you. It’s a good idea to start this early so that they understand how important it is to design and stick to a budget. This will help them develop good financial habits later in life. They’ll also feel more invested in the family vacation if they helped plan it!
Allow Your Children to Learn Their Lessons
You’ve heard the phrase “learn from your mistakes,” but what about “teach your kids from their mistakes”?
The truth is they will eventually make one mistake, but that doesn’t mean you have to rush and replace all their money in a jar they spent. But there’s a fine line between teaching and going overboard. You want them to learn how to manage money, it’s not always fun, but it’s best learned from mistakes. So go easy on them, and there is no need to tell them: “I told you so!”
For instance, if your kid buys a toy and then doesn’t have enough money left in the jar for a snack, don’t give them a snack anyway. Kids must learn that sometimes you can’t get something you want—and that there’s nothing you can do about it except save up again.
Another good example is when your child loses a wallet, use this opportunity for learning and reflection. Ask them what they could have done differently to avoid losing it (i.e., don’t leave it unattended). Then talk about what happened and how they feel about it—and ensure they understand that not feeling good about something doesn’t necessarily mean it was wrong or bad.
Admit Your own Mistakes Sometimes
To teach your kids about money, you must share the times you’ve made bad money decisions. Of course, you don’t have to share every detail, but being open about how you’ve done wrong can help your kids understand what they should avoid.
For example, you once spent $74 on a pair of shoes you didn’t need because the salesperson convinced you they were the most popular item in the store. It was a huge mistake! Not only did they not last very long, but they weren’t comfortable either! On top of that, you had an emergency three days later that you couldn’t pay for because you spent all your money on shoes!
Have Your Child Save up for Big Purchases
On average, parents spend about $300 per year on toys for each child, according to Statista. However, if you teach your child how to save money by having them save up for their toy (or anything else), they’ll learn how important it is to plan and stick with those plans!
When you teach your child to save up for big purchases, they learn to be a good steward of what they have been given. In addition, you can teach them how to set goals and work toward achieving them. This will help them in school and out in the real world as well as give them a sense of accomplishment as they learn how to handle their own finances.
Teaching your kids how to save up for big purchases is a great way to get them excited about the concept of saving. Here’s how:
- Explain why saving money is so important. It’s not just about having enough to buy something you want, it’s also about being able to afford what you need in the future. Kids should understand that if they don’t save now, they will have less money later on when they’re older and have more responsibilities (like paying rent).
- Make sure your kid knows what they want to save up for. The goal can be anything, such as a new bicycle that costs $129.99—whatever seems like that would make them very happy! Make sure your child has a specific goal before starting a savings plan so they can see how much closer they are getting as time goes on.
- Have your child put their savings in an actual piggy bank or money jar if they like seeing the amount of money they have.
- Use kids’ banking apps such as BusyKid to show them how much money they can save over time. For example, you can set up a “savings bucket” where your kid can set goals on how much money they want to put in savings.
Explain the Joys of Giving
Giving money to charities can teach kids many things. It also helps them realize that people in the world need help. This is an important lesson for kids because it teaches them that they are capable of helping others and allows them to make a difference in someone’s life.
The chores app has a section where you can share funds with charities. You can determine how much money your kid wants to give and choose a charity they believe in. This is an excellent way for them to learn empathy while teaching kids money management skills!
Teaching Kids About Money: an Educational Game
You can’t go wrong with an educational game when teaching kids about money. Of course, they’ll feel like they’re playing—but in reality, they’ll be learning valuable skills that will help them make smart financial decisions later in life.
Example 1: Here’s a simple game you can play with your children to teach them about money. Give your kids 20 or 50 dollars, and have them spend it all on things they need. Then, when they’re done shopping, you can inspect everything they have bought so far today. And more importantly, what they didn’t.
Example 2: Here’s a fun way you can use to teach kids about money— by treating pizza delivery as if it’s a salary for working. You can separate the slices as expenses that you have each month. The one that is left gives to them as a slice representing savings. It’s very discouraging and very informative at the same time.
Example 3: Travel the world. You can use Google maps on the computer to find a city in the world and then find a local real estate seller and find a house. Even if you don’t plan to move anywhere, it’s fun to research and learn about other cultures. Then, calculate what it costs to live there, food, real estate, etc.
Example 4: Start a saving challenge. If you have more than one kid, it’s a more significant challenge. If not, you can participate. Start by setting a reachable amount. Then, place a jar in the kitchen for each person that participates. By the end of the week, whoever wins the challenge can choose dinner or dessert.
Example 5: Treasure hunt for lost money. Pretend you lost money in the house, and have the entire family go on a treasure hunt. No mess, just searching for whatever amount it is. Whoever finds it can choose a movie, activity, or ice cream. It’s not so much about the reward but instead that there is one. If you have small children, you can make a special medal of honor.
Takeaway: Kids aren’t always open to learning about finances, but these methods should make that easier. Keep it fun!
If you have children, you know how difficult it can be to get them interested in learning about money. You might think they will always be this way, but they may surprise you one day when they realize that knowing how to handle finances is essential for their future success!
a) Habit Formation and Learning in Young Children. Dr. David Whitebread and Dr. Sue Bingham. The University of Cambridge.