It may not seem that hard, since kids are exposed to money concepts all the time. They see money every time your family goes shopping, gets gas or eats at a restaurant. Unfortunately, financial concepts can get complicated pretty quickly.
At what age should a child start learning how to count money? How old should they be to start getting an allowance, and how much should that be? Should it be tied to household chore responsibilities?
You should consider all of these things when it comes to teaching children about money. Developing their own financial responsibility is a big part of creating a solid foundation for kids’ money understanding. Thankfully, there are many different ways to teach these ideas. The first step is deciding what type of money education they are ready for. This is usually based on their age and what they may already know about money.
Where To Start
When you first start teaching about kid money basics, it's just about simple principles that always work. Here are a few examples: - Learning how to recognize the different coins, how much they are worth and how to count them.
- Establishing a set of suitable household chores, and a chart to track them.
- Understanding the idea of saving money for later. A piggy bank or even a savings account at the bank can be great tools for this.
- Spending wisely. It's important to learn how to spend properly.
- Having fun while learning, with money games. Play board games with money, or set up a play store. It's easier to learn when kids are having fun while they do it.
You can explore these different concepts out in the real world, or with playing games at home. It doesn't need to be complicated or serious and having an element of fun may even help the lessons. The point is to start with a solid foundation for money understanding. The next steps will come easier once these ideas are mastered. Earning money is another idea to start with at this point too, usually with chores.
What Comes Next?
Once kids understand the basics, like how to count money and why to save it, you can keep going and start teaching other ideas. Some further topics include: - As kids get older, allowances should increase as well
- Kids need to learn how to spend wisely as well as save
- Teach kids how to manage their money, and that includes saving as well as investing. They should learn about donating money to charity too.
- Simple economics, like supply and demand. Running a small "business" like a neighborhood lemonade stand is a classic way to start with this.
- More chores. Expand their chore responsibilities, appropriate for their age. Make it more official with a contract, instead of just a chore chart, so that they can feel like they are being treated more like an adult
- Learn more advanced money terms, like compound interest, bank account interest and so on. Kids should know how banks work and what happens to their money when deposited.
- Start looking beyond chores for ways to earn money. Even kids can start small businesses and get first-hand experience of financial concepts, responsibility and hard work.
All of these lesson ideas will span over many years, and should not be worked on all at once. Parents should continually watch kids with money and teach them as they go instead of trying to play catch up later. Developing solid responsible money habits from an early age can make a big difference as they get older and have more decisions to make on their own. Once they hit the teen years, these habits will be established and help them become financially savvy adults.
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