Even small children can be taught about money, you just have to get creative. Money does not have to be a scary topic to discuss in your family, in fact it can be a great topic to discuss. You can encourage your children to be realistic about how money works, how it is earned and how they can make more of it. These tools can really help them with their personal finances in the long run.
Here are five tips on how to teach your children about money:
1. Use A Piggy Bank Or Clear Jar To Save
The piggy bank is still a great idea, but it doesn’t give children a visual to their money or how their cash or savings is growing. Instead you can use a clear jar, so they actually see how their money is growing. Yesterday, they had a dollar bill and five dimes. Today, they have a dollar bill, five dimes, and three quarters! Talk with them about their money and encourage them about how wonderful it is that their "account" is growing.
2. Show Them That Things Cost Money
It is great to actually show your children that money is earned and doesn't just grow on trees. You have to do more than just say, “That Barbies costs $10, sweetie pie.” Help them by grabbing the dollars out of their jar, take the money with them to the store, and have them physically hand the money to the cashier. This simple action will have more impact than a five-minute talk.
3. Give Your Children "Commissions"
Pay them commissions based on chores they do around the house such as putting away their toys, taking out the trash, "helping you cook", cleaning their room, mowing the lawn and more. This helps your kids understand that money is earned and not just given. This along with their jar savings also helps them understand how much they "earn" allows them to buy certain things, such as toys, snacks and more.
4. Teach Them Responsibility and Reality Through Their Own Bank Account
You should be able to set them up with a simple bank account at the appropriate age if you’ve been doing some of the above steps regarding money. This takes money management to the next level, and can help prepare them for managing a larger account when they get older. You can teach them about balancing a checkbook and even taxes.
5. Have Fun Through Games, Budgeting and More Money Play Ideas
Children should learn the importance of making a plan for their money, but let's be real, it has to be fun! If they are teenagers, you can put their ever-loved mobile device to good use, through free budgeting apps, such as Mint.com. Approach the topic of money realistically, and as a fun topic, not as a burden.
There are many games that can help small children learn about money, such as Monopoly and Life. Grab a pizza or candy and sit down, talk about money and play a game that will teach your children about personal finances while having fun as a family.
For small children head to the Dollar Tree and purchase order pads or a sales order book. Have the kids play "restaurant" by taking each other's or your food order, setting prices and paying for their pretend "meals", great option if they have a play kitchen too. It is creative, fun and kids love this game!