How to teach kids about money the easy way
Imagine this: You are sitting at home after a long day at work when your 8-year-old kid walks up to you and asks for the latest video game console they saw on TV. Despite being tired, you wonder if you should accept your kid’s request or teach them the value of money and why saving is important.
Money management is an important skill for every individual. And as a parent, you have a golden opportunity to teach your little ones how to manage finances from an early age. Children are quick learners, and when you introduce them to savings, budgeting, and compound interest, you help them develop healthy financial habits that benefit them throughout their lives.
The best part is, it is not difficult to teach your children about money, it is all about starting simple. Here are some practical ways to teach your kids about money. These tips can help you raise financially responsible children with skills to handle life’s uncertainties.
- Start with the basics
Introduce the concept of money to your kids by explaining how it is earned, spent, and saved. Teach them about different denominations and the value of each. With this knowledge, kids can understand how different values work in the context of buying and selling goods.
- Use real life experiences
Kids learn best through experience, so use real life experiences to teach them. Give your children some money and let them buy something they want. Then take them to a store or supermarket so they can see how much different items cost and decide which item is worth their money. This experience can teach children about setting priorities, making wise purchasing decisions, and how to save money for things they want.
- Familiarise your kids with bank and savings accounts
Take your kid to the nearest bank to teach them how to open a savings account and the way it works. Explain to them the benefits of savings accounts, such as earning interest, having a safe place to keep funds, and being able to save for something they want, like a trip to the amusement park or a new bicycle.
- Educate them about needs and wants
Needs are essential things needed to survive, like food, shelter, and clothing, while wants are things that people desire but may not necessarily need.
To help kids understand this concept better, use relatable examples. For example, ask them if they want a healthy snack or chocolates. Then move to thoughtful questions like, “Do you really need the newest video game console? If yes, then why?”
Encourage them to prioritise their needs over their wants and ask them to save a portion of their allowance or money they receive as gifts in a bank account for minors. This account will help them to save money for their goals, be it something they need, like new school shoes, or something they want, like a new gadget.
- Open a junior bank account
A junior bank account can help kids learn about budgeting and savings in a practical way. It also gives them a sense of financial responsibility. With their own account, kids can learn how to make deposits, withdrawals and track their expenses.
Many children’s bank accounts also offer high interest rates to help them grow their savings more quickly. Some banks even offer gift cards, shopping discounts, and exclusive perks to help kids save and manage their money.
Ending note
Every responsible parent should educate their kids about financial literacy. It takes time and effort, but the benefits are invaluable. They will learn savings and budgeting skills, make informed decisions with money, be less likely to accumulate debt, and, most importantly, have more opportunities for financial growth.
