It is so easy these days for children to think that money really does grow on trees. So much pressure is being placed on kids to have “the best” of everything, from mobile phones and iPods to brand name clothing and accessories. Teaching a child the value of money is the first step parents can take to ensure their children financial security in later life.
Teach Kids to Identify Money
Before discussing savings and providing an allowance, parents should first teach the child how to count, use and identify currency. Creating a pretend supermarket at home is an ideal method.
Gather a collection of coins and notes and point out to the child the different sizes, colours and shapes of the currency to assist them in identifying different values. Place coins under a sheet of paper and allow them to shade the outline and print of the coin.
Once the child has become familiar with the value of notes and coins, introduce counting games. Ask them how many coins they will need to make up certain values. For example, how many 20 cent pieces will the child need to make one dollar? There are many different combinations for the child to practice. There are also printable worksheets and games on the internet, to assist children learning to count money.
Photo by Annie Spratt on Unsplash
Introduction to Wages and Savings
Teaching children about finance should begin as early in their life as possible. At a young age it is easy for them to believe money is readily available from their parents or a hole in the wall. They don’t understand money has to be earned. Giving children an allowance in exchange for chores is great way to teach them the concept of earning money and receiving a weekly pay packet in return.
Open a bank account or supply the child with a piggy bank to encourage them to save. When shopping with children it is common for them to say they want or need certain items. Explain to the child that people normally have to save for items when they have no cash readily available to spend. Encourage the child to save part of their allowance to purchase these items.
Other ways to teach kids to save include:
- Layby – Allow the child to layby an item and make regular payments from their allowance until it is paid.
- Interest – Parents may wish to reward the child as they save. Just like in a bank, parents may choose to give the child a small percentage of interest.
- Use prepaid mobile phone cards.
- Discourage impulse buying.
Instead of giving in to children’s demand for new bike or the latest gadgets, encourage them to save for these items and explain to them the importance of doing so. Teaching kids the value of money is a lesson for life. They will always need to use money, handle money and make money. Parents can ensure it is done wisely.