A concept so simple to us as adults may seem completely alien to our kids.
How are we to impart the value of money to children that are increasingly living in a cashless world?
Read on below for some helpful tips.
What is Money?
When explaining what money is to kids, it's best to show them by example. Of course, sitting down and showing them what a dollar coin, and $10 note are is easy, but you still need to explain its value, and what makes it practical.
To show kids that money is the system of assigned value we give to both physical and digital objects, start by doing something simple like playing shops. Set up a store for them, and swap roles as both customer and store-keeper while you play. This will allow you to demonstrate how worth is assigned to goods and services, and how we use money to pay for them.
Teaching Kids the Value of Money
How would you rate your financial literacy?
Get them to help you collect the items in the store. Then talk to them about the cost of each item compared to others in your shopping basket.
We’re a bank, so we’ll leave the nutritional advice to others, but perhaps as a starting point you could compare the cost of a block of chocolate to, say, a kilogram of carrots.
You could also look at the difference in price between different brands, as well as using the per unit cost information displayed on the supermarket shelves to show them how to accurately compare prices.
Once they understand the cost of day-to-day purchases, move on to bigger ticket items to help them formulate their own spending - and saving - priorities.
Kids Money Management
Once children understand what money is and its value, the next step is to teach them money management. Here are some handy tips to help them understand this concept:
- Spending and saving jars - using physical money - coins and notes, install two jars in your home where your child can make their own decisions on how much of the money they earn goes towards saving or spending. Explain how it's important to watch the levels of the jars go up and down over time when they make purchases.
- Pay for small jobs - If your child is old enough to help out around the house, reward them for their efforts with small payments. This will help them appreciate the value of money more, knowing that they had to work to earn it. The decision can be left up to them as to whether they want to spend or save their earnings.
- Offer saving incentives - if banks do it, why shouldn't you? If your child has decided to save for something big, why not make them a promise that if they reach a certain level in their savings jar, you'll top up the amount needed to reach their goal? This will help them see saving as a rewarding experience.
- Give them a place to save - if their savings jar gets too full, think about getting your child a piggy-bank, or even opening them their first savings account.
