Parents should teach their children about money from an early age. Even preschoolers can understand some lessons about the value of money.
Failure to start their financial education early can lead to unreasonable demands in the family context. Also, a lack of parental advice about money can result in difficulties for the young adult after leaving home.
Here are five tips for teaching young children about money.
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Give a small allowance for school-age children
When children start attending school, they are exposed to opportunities to spend money, and they hear classmates talking about money. Giving an allowance is the best way to deal with the resulting demands for cash. Also, giving the child a lump sum every week forces them to plan so that the money lasts more than one day.
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Provide opportunities to earn small amounts
When there is a task available that is outside their customarily assigned chores, offer the child a small amount for helping. That could involve assisting Dad to clean the garage, or helping Mom weed the vegetable garden. This experience provides an introduction to the concept of earning money through work.
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Play games using fake money
Board games and card games that involve fake money give children an opportunity to practice using money in various ways. The calculations and decisions they make while playing the games prepare them for using real money later in life.
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Set up a fund for large purchases
If your children are asking for something that is beyond the household budget, such as a backyard trampoline or a video game console, start a fund. You could put in a sum to start the process, and the kids would then be invited to donate something. They could use part of their allowance, or money raised through extra chores or garage sales. This practice helps children to learn about the sacrifices involved in buying the things they want. Also, it allows them to experience the satisfaction of purchasing a desired item with funds they’ve helped to raise.
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Show children price tags
With certain purchases for the child that they can understand, such as an item of clothing or a book, occasionally show them the price tags while shopping. Alternatively, show the child the sales receipt when you get home, which will allow them to begin seeing the market value of things they use.
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If you give small children the opportunity to learn about money gradually, they will be much better prepared to begin making important financial decisions in their teens. Also, educating your children about money should help to reduce their unreasonable demands.
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