Ways to Teach Kids About Money
It’s never too soon to start teaching kids about money.
And money is such an important part of life that grasping an early understanding can underpin how they behave with money all their lives. Recognising that money is the building block for just about every aspect of life can also lead them into lucrative career choices. Learning accounting, for instance, opens doors to well-paid corporate positions or to profitable self-employment.
So how to start? Here are some ideas for teaching kids about money even while they’re still very young.
Keep Activities Age-Appropriate
Some research suggests that as soon as children are old enough not to automatically put things in their mouth, they can benefit from being given coins to handle and play with.
Kids as young as three years old have definite opinions on what they want. They won’t understand the real value of a few coins, but they’ll be curious about money, how it looks and feels, and what it’s for. Letting them handle and play with coins under supervision builds their awareness and feeds natural curiosity.
Older children, by around seven, can differentiate between needs and wants, and by the time kids are in their teens they’re definitely ready to start looking after their own money.
Talking about money with children of all ages helps normalise it and takes away some of the taboo surrounding discussions about personal finance.
There’s no better place to learn about spending money than in a shop. Shopping activities could include:
- Discussing discounts. Look for BOGOF deals and explain what they are and why they may not necessarily be the best way of deciding on a purchase.
- Explain contactless spending. In a cashless society it can seem like magic to kids. They don’t automatically know that money is coming out of your bank account every time you use the card.
- Talk about ethics. For instance, why you might choose to buy free range eggs even though they cost more.
- Talk about branded goods compared to generic brands. Are ‘own brand’ goods just as good, even though they might cost less? You could maybe set up a blind taste test at home, to try out any theories.
- Get kids to try and estimate how much a trolley of shopping will cost. Estimating is an important skill and can help give kids a feel for numbers that might help them make better decisions in the future.
Visit Charity Shops
These are great places to take younger children who have a bit of pocket money to spend. They get to choose and make decisions between items they can genuinely afford, experiencing the power of money over feelings (in a good way) without any need to explain the connection.
It also opens the chance for all kinds of other questions and discussions about money:
- Why people donate to charity, and would they also like to donate something?
- Reasons why people might shop in charity shops, whether they need to or just like a bargain.
- How the cost of second-hand goods compares to the same item bought new.
- How occasionally buying second-hand can also help the environment.
- How charity supports some people, and how their own purchase helps.
Start Saving Accounts
A simple piggy bank or money box is an ideal way to introduce very young children to the idea of squirrelling money away for a later date.
Help older children save for items they want by giving them ‘wages’ for helping with chores. Have high paying jobs as well as lower paying ones. Higher paying examples could be mowing the lawn, washing the car, or cleaning windows. Even very young children can help by tidying up their bedrooms. Here’s a handy list of potential chores grouped according to age.
Open bank accounts for older children to get them used to the concept of still having money available despite not having coins in their pocket. Choosing bank and savings accounts also invites discussions about interest, since that’s also an important concept to grasp as they grow into adults who might want to take out a loan.
An interesting exercise to get across the power of compound interest is to ask kids whether they’d rather have £1000 for 30 days or one penny that doubles every day for 30 days. They’ll nearly always ask for the £1000. Help them work out how much doubling a penny every day mounts up to over just 15 or 20 days. They might decide to change their minds.
The more you know about how money works in the real world, the more fascinating it becomes. When children grow up with no fear of money (or the necessary number calculations) careers in accounting or finances can become very appealing.