Finances are something even adults struggle with sometimes, so guiding your kids in the dollars and sense of basic financial literacy can be very helpful to them in later life. Are they a saver or a spender? Do they have an understanding of value and worth? Good money habits are a vital skillset that will prepare your kids for the outside world. So here are some ways to bring up a money-smart kid.
1. Start smaller than money
A helpful tool when teaching children about money is to put a child-friendly currency system in place. Experience is the best teacher, so this will allow them to make financial choices without the stakes of real money. Award them stamps or chits for doing chores and for good behaviour. Then give them options for how they can spend these tokens. A certain amount will earn them a special snack or colourful stickers – as long as they have choices and the rewards are meaningful to them. Help them with their choices by asking them what they want and what it will take to get what they want, and you will soon have a child with a basic understanding of how the economy works.
2. Little lessons
As a parent, you doubtless handle money all the time. Take the opportunity to educate your child while you are at it. Bring them when you go shopping and show them what you need to buy. Ask them questions and let them handle real money. Tell them how you decide what to buy and what not to buy, and maybe let them choose one or two things for themselves. This is a great way to let kids experience what real buying feels like.
3. Role play
Children learn best by having fun, so why not play pretend with a money-minded twist? This method is especially effective for younger children whose imaginations can help facilitate your teaching. Encourage them to act to set up shop, and give them various goods and items to sell and buy. Switch them and yourself between the roles of shopkeeper and shopper, and if you have several children you could even set up a mini market in your own house. You can even take it to the next level with arts and crafts. Decorate a stall and have pretend money, both to have a fun day with glue and paint, and also to make the game that much more immersive.
4. Pocket money
For children going to school, there is probably no better way to teach them about money than to provide them with pocket money for their own spending. Entrusting them with real money makes your child responsible for part of their finances and gives them first-hand experience handling expenses. It would be wise to sit down with your child and have a serious talk about the use of their pocket money, advising them on how to spend, save and share what they have wisely. To teach the concept of savings, consider providing a little extra pocket money while making it clear to your child that they should now save up for luxuries such as toys or sweets.