When is a good age to teach my kid about money?
As a child, most of us would have the thought that money grew on trees (well, it might as well be true since money is made out of paper, and paper comes from trees) and sometimes, money miraculously appears with a swipe of a special magic card.
There’s never a “right” time to teach the value of money to a child, and training up a child can be as early 5 or 6 years old when they can start counting, adding and subtracting. Done right, our children will be able to grow up to be financially independent well ahead in life and in turn, be frugal and sensible individuals.
Learn how to earn
How do you start? Explain to your mini-me that the bank is like a big piggy bank where you can keep your money until you’re ready to use it and that we as adults have to work to have money in the bank. Be transparent to them about what your budget is for the month for the family to spend.
Some fun activities you can try is to ask them to do house chores like sweeping the floor, washing the dishes and doing laundry, and reward them after so they can earn some money based on the given tasks.
Set a money goal of the week to see if they can achieve their goal and save their hard earned money.
Learn how to save
Bring them along when you buy groceries and show them what is a good or bad purchase ( It can be anything from toiletries to food products. On the contrary, the writer thinks ice cream is not counted!) . As for older kids, you can ask them to keep track on how money is spent when you do grocery shopping and even to compare between brands to see what is the best value for your purchase, and even to pay for something at the cashier and to see if the correct change is returned. These are great skills that your kids will remember in the long run.
One way to teach kids about interest would be through delayed gratification. Give them money in the first week and if they don’t use that money, increase it to add a dollar the week after. See if they would want to collect the money each week with an increase of one dollar every week. Once they spend that money, then it would restart again with the amount you give in the first week. Your child has blown his or her wad and still wants that toy? Stand your ground and tell them to wait until the next allowance day. Giving in would defeat the purpose.
Janet Bodnar, the author of Dollars and Sense for Kids says “If youngsters learn how to spend wisely and delay gratification, they will develop patience and planning skills in other aspects of their lives”.
Learn how to give
Apart from learning how to earn and save money, giving can be adopted as a core family value that would teach the little ones to remember the underprivileged and less fortunate individuals.
Be a role model and get them involved by encouraging them to give away a small portion of their allowance as well as yours as an activity. Besides money, it can also be their toys, clothes or even their time to help out in a soup kitchen or in an orphanage.
This would not only teach them about how money can also be used to bless others and to give back to stay rooted in life, but also that at the end of the day, there are more important things in life than money.
We make a living by what we get, but we make a life by what we give.