Teaching children about money management is important from a very young age. UK research shows that financial habits are formed by the age of just seven, so you shouldn’t leave it too late.
It’s definitely important to steer your kids in the right direction from the start. Here are 5 fun ways to teach kids about money…
1. Use play to teach basic money concepts
Make play money with paper and crayons, and clearly mark the different values on each note. Run your own mint by rolling and pressing different coloured coins out of plasticine and play dough.
Toy cash registers and supermarkets are popular roleplaying items for children, encouraging them to learn about the exchange of cash for goods. They can also run a “café” using play tea sets, where you can be a paying customer.
2. Try online games and apps
There’s a host of online games and apps that can help kids learn about money. Many are US based, but Australian-specific sites include Coinland (run by the Commonwealth Bank) and ABC’s Count Us In, with games designed to help children understand basic number concepts.
3. Get your child to help you when shopping
Everyday opportunities like grocery shopping are a great way to explain the difference between needs (apples) and wants (chocolate biscuits). Make a list of all the things we buy with money and find a fun way to sort items into things we need and things we want.
Showing children how to pay and check change will also help them with counting and numeracy – critical for any junior accountant!
Guessing games are also useful: have your child estimate how many items are in a bag of groceries, or how much they cost.
4. Reward first savings efforts
Make a savings chart to show how one week’s pocket money may buy some lollies, but a month will buy a toy, and six month will buy the dream Lego set they’ve got their heart set on. By the time they reach that goal, they may not even want it any more.
Decorating a piggy bank or savings jar is also a good way to encourage children to put away their spare coins. They can gradually watch the money level rise as they add coins.
5. Collect five cent coins
Small five cent coins often get dropped, with adults not even bothering to pick them up (a bad lesson for children!) Encourage your child to save the ones they find, so they can see how many tiny coins eventually add up to more valuable dollars.
Relatives may be happy to save five cent pieces for young children, to be used as play money or put in the savings jar.
Remember that children pay attention to everything we do and the best way to avoid teaching kids bad money habits is to be a good money manager yourself.
Having children can actually be a great catalyst for improving your own money management skills. Pay attention to the messages you are sending your child about money and show restraint when it comes to your own spending.
By Kirsty Lamont, Mozo.com.au
Kirsty Lamont is a director of Mozo.com.au which helps Australians compare savings accounts, credit cards, insurance and other financial products. Kirsty was one of the launch team for Virgin Money when it started in Australia in 2003, and also held a senior role at BankWest before joining Mozo in 2007. A consumer finance expert, she has access to Mozo’s up-to-the-minute data about different financial products on offer.