Children as young as 3 years can understand basic financial concepts, which is why there’s no need for us to wait until our kids are teenagers. Little lessons right from a young age will teach them how to value money. This, needless to say, will help you raise kids who are responsible, independent, and financially wise.
Let’s take a look at the various ways you can teach your kids just how important money is:
When they are 2 years old
Agreed that they might be too young but you could definitely start teaching them the difference between coins.
Kids tend to pick the shiniest or the largest coin when given a choice. Teaching them how to identify coins especially when they are learning numbers (math). While paisas are obsolete now, you can use those coins to help your child learn.
After she is familiar with the coins, you can help her further by asking her to identify coins through pictures. Matching coins to numbers is also a great way.
Caution: Please keep a close eye on your kids when they play with coins. Of course, you know that, but we can never be too careful with our kids. 🙂
When they are 3 years old
At this age, you can focus on teaching your kids patience and the fact that they can’t get anything they want.
For example, when you go to the store, it isn’t necessary that you should buy them something. Teach them beforehand that we are going to the store to buy a particular thing and we will only buy that. If they want something else, they will have to wait.
This is also around the time when you incorporate money in their play. Use plastic/play money when they play house and teach them that certain things are bought in exchange of money. You could use fruit, paper towels, et cetera to make it realistic.
When they are 4 years old
This is the age to introduce the jars of finances. Place three jars or piggy banks one beside the other in your child’s room and label them Spending, Sharing, and Saving. Every time she receives money during birthdays or for any other reason, split it into these three jars.
- Spending: Encourage your child to use the money from this jar for small items such as candy. This will teach her that she can’t have everything she wants. Soon she will make informed choices among her desires and pick the best because she has budget constraints.
- Sharing: The money in this jar is meant for someone who needs it. It could be used to buy something to donate to a charity or it could be given to anyone in need. This is an excellent way to teach her generosity and compassion.
- Saving: This jar is for expensive whims that your child may have. It will teach her to be patient and wise.
When they are 5 years old
You can start setting goals at this age to help them further understand the concepts of saving. Say, your child wants a toy. Set that as a goal for her to save x amount of money to buy.
Make sure it isn’t too expensive because she will get really frustrated with all the waiting. It is advisable to set small goals and move to bigger ones.
By this time, your child will have learnt how to count as well. So, you can both count the money in the savings jar every weekend to see the progress. This will make her eager as she reaches her goal.
Also, the excitement on your child’s face when she finally buys the toy will be priceless.
From here onwards, based on how well your child is learning about money, you can set small tasks to take the financial lessons further. By the time they reach their teenage and start getting allowances, they will be financially-wise. Plus, you won’t always have to yell, “Money doesn’t grow on trees!” 🙂