With our privileged lifestyles, it can get difficult to teach our kids about the value of money. And with the current environment which is always bombarding us with advertisement on the next must have toy or gadget, it can get tricky coaching them about the value of money. Teaching your kids to value money can help them a long way along with managing their money as adults.
Taking the first steps
As a parent, introduce them to money from an early age. When they are toddlers, play games which will familiarize them to the concept of money. Between the ages of three to five, you can play pretend games where you are the owner of a store and money is needed to exchange goods. And while they learn how to count, include money in the equation showing them the difference between coins and bills.
In a recent interview conducted by CNBC, Warren Buffet also thought that a common mistake parents made was not teaching their kids about money from an early age. He goes on to explain how his dad taught him about money from an early age and this helped him to get to where he is today.
Therefore, it is important for them to know that things don’t come for free and we have to buy them to own them. One of the ways you can do that is to talk to your kid’s about your job. Explain to them what you do, why you do it and how earning money makes a difference to all your lives. Perhaps describe other professions to them during a walk in the park or a quick trip to the mall.
Do you need it or want it?
Helping your kids distinguish a need from a want is vital to making them value money. Separating one from the other will help them save and budget for their future. You can start early by cutting out pictures of various objects and asking them to separate it into needs or wants. During a normal play day at home, walk around the house asking them to categorize various objects into needs and wants. At this stage try explaining why certain objects are needs and others are wants. This is a great activity to understand how your child thinks.
You can also use this lesson to take another approach when your kids demand a toy. Instead of giving them the usual reply of “no” or “we can’t afford it”, remind them of the difference between a need and want how this is one of those instances.
Once they have a good understanding as to what money is, usually between the ages of six to ten, you can now start teaching them about budgeting, saving and spending. Take them to trips to the bank or utility bill payments where they can see for themselves that it costs to have basic necessities such as electricity and water. While grocery shopping show them the importance of budgeting and saving through deals. During night outs with the family at a restaurant, let them count and sort out the money when the bill arrives as a learning experience.
Also, include them in family financial meetings where they get to comprehend how the household budget is being set. Through this way you will also teach them the value of budgeting. During vacations or special nights out, talk to them about how the family afforded the trip through savings dedicated towards a trip.
If you at the mall, show them how to compare prices at different stores. For example if you are buying a new TV for the house or a new laptop, show them how different stores have different prices and how to get a good bargain.
As difficult as it can be to say no to your child, the practice is needed once in a while to make understand the value of money. However, it doesn’t mean your child can’t earn the item they desire. If you have not set an allowance for your child yet, make them write a wish list of things they would like to buy in the future. Then ask them to do house chores or other activities and pay them after they successfully carried them out. Show them that if they save this money, they will be able to buy items on their wish list.
Having fun while teaching
The teaching process doesn’t have to be boring, you can make it fun. Try them telling stories about rags to riches especially if it is a story about your father or another relative. It’s a great way to bond with your child as they get to know more about their family background. Maybe even take them for a trip to where the business began and how it grew.
There are also plenty of websites which have fun games and videos teaching kids about money and how to budget and save. Besides the internet, there are plenty of children books which do the same through storytelling.
We all know children are sponges and probably the best way to teach them is through your own actions as a parent. Therefore, show them through your own example on how to save, budget and spend.