What is money?
It’s a good idea to start talking to your children about money early on – what it is and how it’s used.
Show them coins and banknotes, explain which has the greater or lesser value, and what this means with examples.
Every time you shop, allow them to watch the process. Even with card transactions, explain to them in simple terms that this is also a form of money.
The habit of saving
Childhood is the perfect time to learn about saving, in order to lay the foundations of a sound lifelong habit. Additionally, saving is a methodical way to teach the importance of setting goals and can also become a fun process. A good example is a piggy bank. When kids put one coin inside it, you can place another one in as a reward. Prefer a transparent one, so they can see their savings grow, along with their sense of achievement.
Play board games
Games, and especially board games, are a very effective way to teach kids about money. Improvise and create scenarios that train their minds in the use, but also the management, of finances.
Pocket money
Pocket money is the most powerful tool to educate children in financial management.
Set a fixed day and amount, and make sure you’re absolutely consistent. If you decide to give them pocket money every Monday, explain to them that the agreed amount should last them for the whole week, and set limits if they don’t abide by this.
Allow decision making
If they tell you that they want to spend the money they have saved on a toy they saw, listen to them, discuss it, and explain to them that if, for example, they spend their money now, they will not have enough for something else they may have originally intended to buy, or something that may come up, unless they save money again.
Allow them to make their own decision, but do not rush to buy them something else on top of what they’ve bought. Help them realize what their priorities are. Try, as far as possible, to ensure that the money they use from their savings is used on something that gives them joy.
Children’s Accounts
There are other tools such as saving accounts, specifically designed for children to help them learn how to manage money, cultivate the idea of saving, and develop a healthy familiarity with the general concept of money.
Money and its proper management is a lesson all parents should give to their children. Financial education requires patience, but it’s certain that, like saving, it will pay off in the future.