How to teach kids about money?
All of us start making transactions even before we are conscious of it. Generally, the most utilised liquid resource in the world is cash. It is earned in exchange for something or the other. Children are, however, provided with their basic amenities and more by their parents. Hence, it becomes difficult for children to perceive the notion of ‘earning and spending’. Yet, it is not uncommon to see siblings bartering two toffees for a crayon. So, all we need to do is to make them aware about these simple transactions and gradually redirect the focus to money.
The following are a few tips on how to go about teaching your kids about money:
- Start young and be steady: Start talking about deals from a very young age like “If you eat your oatmeal nicely, you will get a choco-chip ice cream.” Encourage the small deals that the children make among themselves (keep an eye to check if they become unnecessarily competitive). This will infuse the idea that nothing comes for free; everything needs to be earned.
- Familiarise them with money: As the children grow a little and is confident with basic numeracy, let them familiarise themselves with banks, notes and coins. Encourage them to take up coin collection as their hobby. Gradually, ask them to take a small trip to the neighbouring grocery shop and hand them a small amount of money. In this way, they can practice exchange of goods and money as per the available denominations.
- They do what you do: We all start learning at home. While going for grocery shopping, if we carry a grocery bag and avoid buying a plastic bag every time or let go of that fancy showpiece in order to save some money, the observant eyes of our young ones will pick up these good habits. Similarly, we can ask them to make a choice between two types of breakfast cereals based on their quality and cost. This would help them figure out the value of money.
- Replace allowances with Commissions: When the kids are a little older and they need to buy a few things by themselves like lunch or a fancy pencil or contribute to a donation being raised by the school, we allot them a definite sum for a certain reason. The same thing can be done in a different way to facilitate their understanding of ‘earning’ – try ‘paying’ them for an appreciative note from a teacher or for doing a chore or other small and big achievements. It will motivate them to do better and realise the value of money in a practical sense.
- Practise savings with them: Savings is as important as thrifty expenditure. Generally, a pre-teen is old enough to be talked to about the importance of bank, plastic money and e-money. Show them how you save a portion of your income for buying a nice house or for their higher education. Encourage them to save up for that one superhero merchandise they want to buy. They may also find it interesting that saving in a bank account earns them interest.
- Bribe Vs Incentive: Be cautious that they do not get confused between incentive and bribe. When you buy him a gift for scoring high in the exams, it is an incentive; if they try to pay a less fortunate classmate to do their homework for them (which may look like a deal on the surface), it is a bribe. Look out for any misuse or dishonest use of money they may indulge in.
Use of money is a crucial aspect of life. If we do not tend it properly, someone else will take the charge and our children may end up acquiring negative ideas regarding earning and spending money. So, it is in the best interest of children that we take it seriously, keep an eye on their expenditures and talk to them about money openly and regularly.