As a parent, it really is your responsibility to teach your children the value of money. When children are young, they really do not have an understanding of where money comes from, and they must be made to understand that money doesn’t grow on trees. You must admit that it feels really bad when your kid keeps asking you to buy him/her stuff when you do not have the money, or when your paycheck hasn’t come in yet. Making them understand how you make money is the first step towards having a good relationship with your children.
Schools are currently required to teach kids financial literacy as part of the curriculum, but this takes place from the age of 11. By this time, the kids will have already picked up a few habits, good or bad concerning money from their parents. The way kids view money will often go with them into adulthood and therefore, the earlier you start, the better for your child.
In fact, as early as 5 and 6 years of age, kids have already developed cognitive skills that are necessary for them to understand basic monetary concepts. They have the capacity to identify coins, count the couns and match items they have to their monetary value. Knowing they have the capacity to understand will make it easier to teach your children the value of money with the tips below.
One of the key important aspects when it comes to money is how to spend it wisely, how to delay gratification and the importance of saving. In this review, we look at 3 ways that you can employ to teach your kids the value of money, and how this can help them in their later years.
Explain How Money Actually Works
You may be surprised to learn that your kids do not really understand the mechanics of how money works. When you teach your children the value of money, you’ll have to start off at the most basic level. They need to know that there isn’t a printing press in the ATM, or your purse. You must make them understand that the bank is the place where the money is kept, and you cannot remove it from the bank unless you earn it. Earning money means working, and being paid for what you have done, and most importantly, you don’t get to have all the money you want to have. Money is scarce and must be used economically.
This may be a little hard to do, but it is vital if your kid is going to understand how money works. You can even invent some playful activities that can engage them in terms of money, and that will teach them more about spending and saving.
A coin identity game would be great at helping your child understand the different values of money. You may watch to observe which coins they choose and let them know which one has more value. Nickel is the most chosen coin, because of its size, and they do not understand that the smaller coin is actually more valuable.
Play a game of store with them, by setting up different varieties of fake shops in your living room and allow them to spend their fake money on the items you laid out for them. Teach them on the prices that are reasonable and those that are not.
Another excellent game you can play is monopoly, as this involves money and the bank. This together with life focus and great games when you start money topics, as they give the kids time to think and know how money works.
Give Your Child An Allowance
Allowances are a great way of teaching your kids how to earn money. When you work, you receive money which is a great lesson. When they work very hard, they should even receive a bonus, to cement this lesson of hard work pays. The money you pay your kid should be enough to buy for small minor items such as toy cars, ice-cream bars, hair clips, etc. On you r next shopping trip, take your child with you, and let them buy what they want using the money they earned.
If it happens that your kid has blown their money on other things, and they now need ice cream, you must not buy this for them, but rather tell them to wait until the next payment of their chores comes through for them to enjoy their beloved ice cream. If you give in at this point, it will defeat the purpose of the lesson you are trying to teach them.
In case your kid wants something very big, such as a new book, or a big toy, they need to save their money on a weekly basis until they get the exact amount they need to buy the specific thing they wish to buy. This is what money lessons are all about.
It is, however, advisable to teach your kids to do more with their money, rather than just spending it. You should encourage them to donate their allowances to charities, or help buy something needed in the house.
Teach Your Children The Value Of Money With A Bank Account
Most banks and building societies tend to have bank accounts dedicated to children. The kids can open accounts, from an early age, but of course, it is with the guidance of their parents. Your child should then deposit money in their bank account whenever they want to save for a big upcoming purchase, and they should even learn how to use the ATM to withdraw the money they save.
In this way, even when they are older, they shall learn to always keep their money in the bank, and they also learn how to save. The beauty of these lessons is that they bring out a certain level of maturity in your kid that will astound you.
How To Teach Your Children The Value Of Money Conclusion
We would all love to see our kids independent, especially when it comes to their utilization of money. If you teach your children the value of money, you are also teaching them how to manage their life. People who spend all of their money without a sense of saving are thought to be extravagant and unwise. If you want your child to value the money they have, you should teach your children those values early.