When do you think your kids should start learning about money?
Secondary school? University? When they start working for money?
The answer is your kids have the ability to start learning about money from the age of 3!
Research from Wisconsin-Madison University has shown that 3-year olds can understand the concept of money.
Kids know that money is used to exchange for things they want. Furthermore, a study from Cambridge University has revealed that the habits affecting their future financial decisions are ingrained by the age of 7!
So, if you’re a parent with children in kindergarten or primary school, this is the best time to help them shape the right attitude towards money and build strong financial habits.
If you’re unsure how to begin, take a look at these 5 easy ways to teach your kids about money.
1. Make Saving Attractive
You can get your child to think about the importance of saving by starting with a conversation like simple questions like:
Why do you think people save their money?
What may happen if you don’t have savings at all?
You may choose to explain about short-term and long-term saving goals and savings for emergencies. Then if they have something that they want to buy, maybe some toys, games or other things, you can set it as their goal and start saving for it.
If your child already has a bank account, you can put the money straight in there. If not, try using a transparent container so that they can see their savings grow each day.
To make it more appealing, you can offer incentives with some simple conditions. For example, you’ll top up 20% of their savings if they can save their money everyday for a month.
2. Talk to them about “Needs” and “Wants”
Teach them the difference between “needs” and “wants” and let them think about the influence on their desire to buy something.
You may ask questions like:
Why do you want this thing?
Did you see your friends using it or did you see it on the advert?
Then have them ask themselves if they really need it.
Remember there is no right or wrong here. We all want something other people have or use all the time. But if your child knows where that influence comes from, they have a better chance to control it.
3. Get them started with easy budgeting
You can get your child to start managing an easy budget by letting them decide what to buy under a given amount of money.
For instance, the next time you go to a supermarket, give them a list of things to buy using the money you give them. Let them choose the specific brand so they can practice comparing products, looking for the best deals and making the most of their money.
4. Give your child a chance to manage their own finances
Your child will get to manage their money if they have enough money to do so.
Allowances should cover the basic things they need to spend on, plus a little bit for them to save.
Some parents may give money to “top up” with whatever is left from the day or week before to make the allowance for that day or week, but that may not be a very motivating way to get your child to start saving.
Just let them save whatever they didn’t spend and give them the full amount the next day or week.
5. Be a good financial role model for your child
At the end of the day, your kids learn most from you.
If they see you spending like crazy all the time, they will of course think that it’s the right thing to do.
On the other hand, if they see you regularly saving money with purpose, always thinking before spending and investing consistently, they will naturally take on those habits.
So there you go guys. That’s my 5 simple tips on how to teach your kids about money. Hope you find them useful and that you can get them to start saving, budgeting and investing their money. Remember financial education for kids can never be too early.
These are just a few ideas to help you get started. There are many more ways to help your child learn about money, check out our Financial Education for Kids Course here.