For young kids, money might just seem like the strange thing grown-ups swap for that milkshake or banana from the shop. But, as they grow, it’s important to teach them what it is, how it works, and even the best ways to save it.
It’s a task that’s even tricker these days given many transactions happen online, away from children’s eyes. So how can we teach them about the value of money if it’s not right in their face?
Effie Zahos is a mum, the editor of Money Magazine and author of The Great $20 Adventure. She gives us her professional advice on how to introduce finance to young kids.
1. Introduce it early on
Effie believes there’s merit in teaching kids as young as you can. Of course, this needs to be adapted depending on their age, so the way you’d teach a preschooler is different to how a primary aged child should be taught.
“I always say that if a child can count, they should be counting in money,” she says. “I think it is up to the parent or guardian to really teach children the value of money.”
Listen to Effie:
Fortunately, financial literacy is now taught in schools, but how it’s implemented can vary from class to class. Effie doesn’t think it’s just a maths and economics subject, but should be taught in virtually every subject since it’s applicable to all future careers.
“It’s not a lesson,” she says. “It’s a life lesson that should be enjoyed and implemented in everything you do.”
2. Involve real money in everyday life
Effie recommends using real coins and money to help kids learn to count. When you’re shopping, get them to be engaged in the shopping and even do a shopping list with you.
As they get older, you can involve them in family finances more. For example, explain that household bills all cost money, and talk about ways you can reduce energy, water and gas bills together.
3. Talk in a way they understand
Young kids don’t care or understand energy bills at first, Effie recognises. You have to explain finances in a way they’ll understand. For example, explain that you have to work so you can buy them a hot chocolate.
Also involve your kids in everyday conversations about money. When you talk about your experiences throughout the day, they will understand more and more.
4. Set goals with them
Make sure your child understands what is a want, what is a need and that each cost money. When they have a grasp on this, ask your children to research how much things they want or need are.
Effie recommends to then, “sit down with your child and say ‘what do you want?’” Be involved with financial planning from a young age with your child.
5. Allow kids to make mistakes
“On the spending side, it’s really important that you do allow your kids to make some mistakes because it hurts more when they lose their own money,” Effie says.
Effie’s own son had a bit of a spending problem, but she’s let him make the mistakes necessary for him to understand the need to save.
6. Warn them about advertising
A great way to encourage saving is to make your children savvy when it comes to advertising and marketing, Effie recommend. “Let’s face it, we all get convinced to spend our hard-earned money at some point,” she says.
Raise questions when you see an advertisement, like ‘Do you want that? Do you think it’s worth the money?’
7. Teach them about online transactions too
These days, money isn’t just about notes and coins. Many transactions in our modern lives take place online and Effie says it’s equally vital to educate kids about that too.
“Let’s face it, our children aren’t going to really handle the paper stuff,” Effie says. “If they don’t know how to manage online in a virtual reality, they’re not going to do well. There are plenty of apps to get you started, particularly if you do pay pocket money.”
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