As a kid, I loved counting my money. I would stack my pennies, nickels and dimes into columns, and I did it every day whenever I had a chance. My siblings used to tease me about it but I knew exactly how much I had in my piggy bank. Eventually, this silly hobby of mine taught me the concept of money and saving.
When I started school, my parents gave me a dollar a day to spend on whatever I wanted, but I chose to save it up instead. By the time I was 12, I had saved up a few thousand dollars in my piggy bank. Back then, this was a lot of money for a young child!
Fast forward to a few decades later, I am proud to say that my money-management skills that I’ve learned since I was a kid has served me well. Today, I am debt-free and have enough stashed away for our emergency funds.
Knowing money and learning how to budget is an incredibly important skill. Unfortunately, this isn’t a skill set that is taught at school nowadays. It’s really up to the parents to teach young children about good money habits, and we should start when they are young.
Fortunately, it is easy to teach kids about money. Kids are born ready to learn, and they can pick up valuable skills in early childhood.
Here’s how you can teach your preschoolers and kindergarteners about the concept of budgeting, and introduce young children to money:
1. Start young
While young toddlers will not understand the value of money just yet, we can start by introducing them to different types of coins, and teaching them the names of pennies, nickels and dimes. Teach them to identify the coins by sizes. Make a game out of it by matching coins to the correct sizes, or start by simply counting the coins.
2. Model the behavior of saving for them to see
Kids learn by imitating. They like to follow parent’s lead in everything. I notice this most often when my eldest like to copy whatever words I’m saying. I have a bad habit of saying “what the heck”, and hearing my daughter say it made me more conscious of my behavior.
What we do in our everyday life is what we model for our kids to learn. It goes to same with the concept of budgeting. If we learn how to develop a budget for the grocery store and resist impulse buys, our kids will pick up these good habits in time.
3. Take them along to grocery stores
Shopping at the grocery store with kids can be difficult. To be honest, I spend twice the time in the store when my kids are with me, but I still choose to bring them along because I want my kids to understand that food comes from the grocery store, we budget for our weekly errands and we pay for our purchases with money.
Before heading to the store, ask your preschooler or kindergartener to clip coupons with you. What you’re at the grocery store, have your kid hand over the coupons to the cashier at the checkout. They will not understand initially, but it will make them feel like they are helping. With time, they will understand that the coupons help with savings. This is a fun way to talk about money. I mean, who doesn’t like saving money?
At the grocery store, another way to teach your young child about money and budgeting is to compare prices. This will only work if your child knows how to count. Or show them alternatives. Pick up the cheaper option if you can show them how much you can save with each purchase.
4. Turn daily activities into money experiences for them
If you know that you’re going to run an errand at the bank, bring your young kid along with you. During your trip to the bank, show them what a teller does, and what an ATM looks like. You could even open up a bank account for your child and discuss how you can save your money by putting them into the account.
5. Play pretend with money
Kids between the age of 4 to 6 love playing pretend. Today, I told my daughter that we need to use money to purchase tickets for our air tickets so we can visit grandma and grandpa who are out of the country. After internalizing my words, she proceeded to set up a “ride” for her stuffy, placed fake paper money beside her toys, and instructed me not to touch them because she needed to buy her stuffy a ticket for the ride.
The thing is, many young kids love to play imaginary games, so come up with fun ways to teach kids about money. Consider playing imaginary restaurant and remind your child that we all have to pay for our meals after eating. Alternatively, set up a store front in the living room and have your child shop for the things that she needs with fake money. Soon they will learn the concept of exchanging money for products.
6. Teach them about choices to make with money
Recently, my eldest has started to ask me about Disneyland and tells me that she would love to go there one day. I seized the opportunity and made a teaching moment out of it! I told my daughter that Disneyland will cost a lot of money, so she will have to save up her money for this special trip. Instead of buying candies or that colorful rainbow lollipop that she saw over the counter at the grocery store, I encouraged her to make a choice – either spending her money on the candy today, or save it up for our Disney trip. The goal was to make my daughter understand that money is finite and she must make a choice according to her priorities. My daughter caught on quickly, and was totally fine without the candy purchase.
7. Set up a piggy bank
Besides setting up a bank account for your young child, consider setting up a piggy bank at home with a big transparent jar. Start off by giving your child a goal to work towards to. For example, by the time the jar is filled with money, consider rewarding your child with the Disneyland trip that she’s been asking for. As they add coins into the jar, your child can observe how money adds up, and learn to understand the concept of saving.
8. Help them earn extra cash
Consider setting up a lemonade stand to show them how money is earned and how much work it takes to get it. I’m sure it will be a fun experience for all, but the most important part is to teach your kid about working for money.
Alternatively, you can tie house chores to allowances too. Encourage your kids to keep their toys or make their own bed. Start small so they understand that money doesn’t grow on trees.
Learning how to handle money is a lifelong process, so start teaching kids when they are young. I hope that these tips on how to teach your young children about money will help make the process easier for you. Just remember, the earlier they understand the concept of money and embrace good financial habits, the more likely they will have financial success in the later years. So, introduce the concept of money to children when they are young.
If you’re looking for some more lessons and activities for older age groups, annuity.org has some great suggestions. Check them out here!
What are some methods that you have adopted to teach your kids about money? I would love to hear from you too!
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