How To Explain Money to Your Children
Being a mom of 3 has revealed quite a few things that are really important to teach my kids. One of those, is teaching them about their financial future. Turns out, children can pick up on money habits and language at a fairly young age.
My goal in writing this, is to inspire other parents out there to take some time and orient your kids on money habits. I look at the approach of teaching kids about money in such a fashion where it is not about being rich and having boat loads of money, but more of just an understanding of how money works in the world. These are some tips that have worked well for us and can do the same for you.
“If you don’t teach your kids about money, the world will.”Rachel cruze – Financial expert co-author of the book smart money smart kids
First, you want to start off by asking some preliminary questions, just to get a feel for what your child understands at the moment about money and their financial future. If they have a banker in the family like we do, then your kids will probably be a little ahead of the curve. If not, don’t worry just start with the basics.
Once you have asked questions and you have found your starting point with your kid(s), move into a vocabulary lesson. There are so many terms that are used when it comes to money, that kids have never even heard of. You want to make sure that they have the language down packed so you can properly communicate with them. In the beginning, my kids had no clue what I was even saying. It’s a completely new language to them, start with the vocabulary. Some homemade flash cards would be a great idea to help them out.
Create a Chart and use Colors and Pictures
When it comes to money, you want to give your child a visual of what you are trying to teach them. Creating a chart and using colors with pictures, it can really help you relay the messages to your child. Not only does this allow for your kids to stay engaged, but you also make it fun for them. Using a chart, a child can see over time where the efforts are going. This is a key habit towards teaching your kids about their financial future.
Set Long Term Goals
An important concept that you want your kids to develop, is to learn how to set long term goals for themselves. Learning about money is a great opportunity to start working on this focus. My children were ready to burn their little pockets as soon as they had a grip on some cash. Teaching them to slow down and gain an understanding of the long term picture, will help them develop a healthy relationship with money.
In our home we like to play the board games LIFE and MONOPOLY. We have an amazing time playing together as a family. We have laughed like you would not believe. In addition to bringing your family together and spending time together, your kids will naturally pick up on the money aspect.
My little one started playing MONOPOLY at 4 years old and within no time at all she knew the concept of trading and buying. She learned how to count the best she could and the rest we helped her with. We still play today and she can handle her own. We just help her count the big numbers 😊. You want to keep your kids engaged within their learning process. Board games are a great way to teach your kids about money.
Talk about Coins
This is usually where littles ones start. My kids got their little hands on some dirty coins at an early age. We used coins as a way to teach the kids to count early. People don’t value coins much anymore today. Who blames them, they accumulate and then you have to roll them and take them to the bank.
In our home, we each have our piggy banks and the kids roll their coins and take them to the bank to convert them to cash. When they get home, they take their cash and they put it in their wallets. Valuing coins is important and they can use them to start their first piggy banks.
Start a Piggy Bank
My kids grandfather bought all three of them little piggy banks since 4 years old. They always collect change and they fill up their piggy banks. Starting a piggy bank teaches your kids how to save money. Saving money is something most people struggle with today. You can aid in avoiding this with the proper introduction to saving money. If you don’t have a piggy bank at home, buy one and start.
Difference between “Wants and Needs”
Before you go off and start that vocabulary lesson, make sure you add terms such as “wants” and “needs.” These are the little details that should be started at a young age. We all know that we spend money on both wants and needs. Try to incorporate this lesson early on. It will pay off later.
Go to the Bank Together
As I mentioned earlier, we take trips to the bank together. Take this opportunity to help them gain confidence. You want to teach money literacy to your children, but you also want for them to gain confidence within themselves, when it comes to financial habits. Going to the bank together and having them fill out their own deposit slips and talking to the tellers, is a great way to build their financial confidence.
Open an Account with your Kids
There are many different banks that have offers and options for kids. You can go to the bank and open a savings account for your child. In addition to savings accounts, there are also checking account options for children too. They can have their own debit cards and learn to make purchases with you. As long as a guardian accepts full responsibility for that account, you can start teaching your kids about banking habits a-lot sooner.
Introduce Delayed Gratification
One of the best money habits that you can build with your children is the concept of delayed gratification. Like I always tell my husband – we want to teach our children the ability to make short term sacrifices for long term results. Introducing this term within your vocabulary lesson would be a great tip 😉
Ain’t nobody going to hand over your children anything. As a parent, make sure you don’t fall for that trap either. Teach your kids that in order to make money, you need to put in work. Start by giving them small responsibilities around the house, so they can begin to understand what goes into working hard. The sooner they can understand that hard work is necessary in order to build anything, the better off they will be in their journey towards their financial future.
Lead by example
I can’t stress enough the power of leading by example. Children watch what we do and listen to what we say a-lot more than you think. When it comes to money, they will absorb your outlook on money. Don’t stress over money in front of them and don’t create any habits that you wouldn’t want for your children to model. When children can sense that we have our own finances in order, they will eventually model the same.
” If you don’t teach your kids about money, the world will.” It is imperative that we take ownership of teaching our kids about their financial future. If we don’t do it, society will do it for us. I don’t know where you stand with your financial literacy, but I am sure you want your kids to learn about money as of little.