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You want to teach your child the importance of money, you want them to make good financial decisions on growing up, so that they don’t face money troubles), but how do you begin teaching them about financial responsibility? Starting early would be a wise decision because the money lessons your child will learn at a young age will remember with them for a long time. Now if you are looking for ways to teach your child that ‘money doesn’t grow on trees’ (you knew this was coming, didn’t you?), we have got some practical ways for you.
Ways to Teach Kids About Money
If you want to see your child grow into a responsible individual who understands the importance of money, here are some age-appropriate ideas for you. Refer to them to make your kids financially savvy.
1. Age 2-3 Years
Teaching your child about money may seem difficult while she is so young, but in some simple ways, it won’t seem like a task. Introducing simple financial concepts at this age can be fruitful. Here are some simple games and ideas to teach your child about money.
- Get a Transparent Piggy Bank (Money Box) for Your Child
Get your toddler a transparent piggy bank, and encourage her to put the coins or notes she receives from elders in it. Over time, she will be able to see money increasing in her little piggy bank. And every little penny that she saves up will give her a sense of accomplishment.
- Play the Coin Identification Game
Introduce different rupee coins to your child and let her observe each coin. She will understand that each coin is different from the other based on colour, shape, and size. Once she is able to recognize the difference among coins, you can explain to her the worth of every coin.
- Be a Good Role Model
You are your child’s primary role model. She will observe every little detail about how you function. If you tend to overspend, she is likely to pick on that. Showing her that you spend money wisely and pay bills on time will help her to cultivate the same habits as she grows older.
2. Age 4-5 Years
Associating money with the simple math concept of addition is a smart way to cultivate the habit of counting and calculating money. Apart from this, here are some more activities to teach kids about money.
- Teach the Art of Waiting
Instilling the habit of patience can be beneficial in this case. Here, it is necessary to teach your child that she may have to save before she purchases something. This can be challenging even for adults. Hence, it’s great to introduce this at a young age.
- Use Discount Coupons
In this activity, ask your preschooler to help you put together all the coupons required before you’ll head to the store. Once at the shop, ask her to match the coupon to the product. This approach can help you teach your child the value of money.
- Try the Money Moments
Involve your child in simple money matters like giving her a ten-rupee note and asking her to pick a candy within that limit. Also, let your child make the payment for her purchase. This way your child will learn how everything costs money.
3. Age 6-8 Years
This is the right time to introduce the term ‘pocket money’ to your child. A child gains the trust, confidence, and encouragement from her parents based on what she has learned so far. Here are some hacks into building a financially responsible child.
- Importance of Giving
It is necessary to teach her the principle of giving back to the community in the form of charity. Be it an NGO or charitable trust; you can have your child keep a certain amount for a specific social cause. This way, the value of money for kids is understood.
- Pocket money
Giving your child pocket money on a weekly basis without her having to earn it can be futile. She won’t learn anything in the process and might take you for granted. You can teach her the importance of money by getting her to do simple chores around the house like cleaning her room or helping in the kitchen and paying her weekly allowance. This way your child will learn that she shouldn’t expect pocket money without doing anything. She will realise that she will have to work in order to earn money. But make sure your child doesn’t get in a habit of asking for money whenever you ask her to do a simple task.
- Keep an Eye on Your Child’s Spending Habits
Have a conversation with your child about her spending habits and how much has she managed to save in the past several months. We’re sure your child will be able to self-evaluate how good she has been with money. Check with her on whether she has financial goals set for herself and motivate her on the good habits that she has been following.
- Ask Your Child What She Wants to Do On Growing Up
Knowing what your child wants to be in the future is a brilliant way to talk about careers and their scope. Discuss the fact that everyone works in order to earn money. Bringing in positive feelings about working and earning can help motivate her into having a healthy attitude.
4. Age 9-12 Years
By this age, children develop a sense of understanding and they learn to follow instructions given to them. This is the right time to inculcate good habits in them. Follow these things to instil saving habits in your child:
- Open a Savings Account for Your Child
This is the right age to open a bank account for her since she has a better understanding of calculating and saving her money. This lets her purchase an item that she saved up for by giving a true feel of ownership.
- Teaching the Difference Between Needs And Wants
Making your child aware of the difference between the need and want for something can impact the way she prioritizes her spending. It can help with her spending decisions along the way.
- Teach Your Child About Cards
By now your child must have noticed you swiping either a debit or credit card and inquired about the same. Before your child gets the wrong information about these cards, make her sit down and explain the different cards and their functions based on the bank accounts.
5. Age 13-15 Years
This is the age, by when a child can take up part-time work also. Doing part-time work makes them understand that it takes efforts to earn. To teach them the value of money, try these following techniques:
Now that your child has hit her teens, introducing the concept of budgeting is apt. Since she has been taught about saving, spending, and charity, budgeting can help her make a list of her expenses and ways to meet them by regulating unnecessary spending. It also depends on your teen’s income.
- Allow Your Child to Make Spending Mistakes
There could be a clash between you and your child on matters related to money. She might have spent on things you did not want her to and she might get angry. But, all this is a learning curve. It is better than she will learn from her mistakes at a time where she is supported by you rather than later. This is the time to guide your teen and revise the financial values that you’ve taught her over the years.
- Earning Perks And Rewards
By now your teen is aware of the concept of earning money by doing chores around the house. You can let her earn more money by doing bigger tasks like helping a family member who needs some work done and that she is willing to pay your child for it.
- Introduction to Investing
Apart from earning money through interest from savings, here’s another alternative to teaching her about money. Make this a family activity where each person including your child pretends to invest in stocks of companies they are familiar with. Then read the newspaper or watch the news to find out the value of the respective stocks chosen and how it fluctuates.
Teaching your child about financial concepts from a young age can influence her spending habits and help her make better financial decisions independently. Teaching saving habits are beneficial and last a lifetime. Your little one will eventually come to understand that money can provide a secure and stable future to some extent.
Also Read: 10 Basic Life Skills for Children