How to teach kids about money
We hear a lot about money – that it will make you happy (and that it won’t), it doesn’t grow on trees, and you can have too much of a good thing. Raising kids is all about giving them the skills to navigate life, and money can be an important part of that. Finance experts say children as young as three can grasp the concept of saving and spending, and a recent study revealed money habits are formed by age seven. Teaching kids about money doesn’t have to be serious (in fact you can make it fun), and you can start at any age. Here are our top tips:
Teaching pre-school kids about money
Clear jar money bank
With digital money and EFTPOS cards, it’s hard for little ones to grasp the idea of finite money. Give young kids a clear jar and some coins to teach them the concept (and joy) of saving. The classic piggy bank is pretty cute, but a clear jar lets kids visually see their money grow. When they desperately want an ice cream from the corner store or a new toy car, give them the choice to have one if they use their savings.
Include money in everyday conversations
Just because toddlers are young doesn’t mean they shouldn’t be included in positive conversations about money. When you’re making your own spending decisions, talk them through with your little ones – like when you’re at the supermarket and you’re choosing between a cheaper, homebrand version or a more expensive version. Explain that if you choose the cheaper version you might be able to afford more.
Teaching primary school kids about money
Show opportunity cost
At this age, kids can start to learn to weigh up decisions and understand possible outcomes. Which is why it’s an appropriate stage to begin to understand opportunity cost – the loss of one alternative when another alternative is chosen. “If you buy this soccer ball, you won’t have enough money to buy that X-box game”.
Give them paid chores
Good old pocket money is a great way to teach kids the concept of finite money, saving and opportunity cost. Rather than just throwing money at them, you can set chores with a designated pay. They’ll learn that they need to work for money, and bonus, you’ll get some extra stuff done around the house.
Show them the importance of giving
Once they start earning, you can show them how good it feels to give. You can set an example by giving to your own charity, or being generous with friends and family in need. When they have a sibling or friend’s birthday coming up, you can ask them whether they’d like to buy something little to contribute to a gift. Even if it’s a dollar pick ‘n mix they will start to see the satisfaction of giving (and will surely be well received!)
Teaching pre-teens and teens about money
Show them gratitude
Rather than giving a lecture on the topic, lead by example by making an effort to express your own gratitude for what you have. When your kids are comparing their own belongings to others (letting you know how unfair it is that their classmate has a $10,000 car compared to their $2,000 version), tell them that while that’s nice for them to have that car, their $2,000 car still goes well and gets them where they need to be.
Teach simple budgeting
No matter how small their income, now is a great time to get them thinking about their budget. If they’re already glued to their devices, there are plenty of great budgeting apps available.
There are plenty of ways for teens to start making their own income – lawn mowing, dog walking, running an Etsy craft store. The entrepreneur Ingvar Kamprad founded Ikea when he was just 17 years old! You can help by giving them a shout out on the community Facebook page, or print off mail-outs for neighbours. If they’re not the entrepreneurial type, you can start by helping them find a job.