It’s never too early to start talking about money with your child. As young as the age of three you can introduce coins and counting small amounts of pennies and playing shops. As your child gets older continuing to be open about money and your own money habits can help to develop your child’s own understanding. All this will lay good foundations and increase the likelihood of a good relationship with money, financial security and healthy savings in the future. Here are some tips to try.
1. Play with Money
Introduce your child to the concept of money by showing them the different coins and notes and their value. Count out how many pennies each coin is worth. Play shops using real coins. Start playing with pennies and gradually introduce the different coins when your child is ready. Use the coins to add small amounts and pretend to pay for things at your own toy shop. Take on the roles of shopkeeper and customer. Learning through play is so beneficial for children and a game of shops is great for teaching children about coins, amounts of money, what things cost, adding and how we buy things.
2. Use Coins in Real Life
As your child gets a little older, when you pop to the shops take them with you and get them to pay with coins for small items. Let them see first hand how we use money in a shop in real life. With the use of debit and credit cards, children don’t always get to experience coins themselves but if we can give them that, it really helps their understanding of money and how it works.
3. Give Pocket Money
Give your child pocket money. This introduces your child to budgeting and the real-life value of money. If your child wants to buy extra things, get them to do chores for the additional money. Doing chores for money teaches children about the value of money and can help build a strong work ethic. These chores should be in addition to other daily tasks that your child would normally be expected to do, such as making the bed. Encourage your child to organise their pocket money into three categories – saving, spending and sharing.
4. Get Saving
Encourage your child to save up for the things that they want but they can’t afford to buy outright. Help them to create their own savings goals, whether it’s a toy they have seen or an activity they want to do. When they are old enough help them to open a bank account to save for bigger goals for the future such as a car.
5. Spending Money
Allow your child to choose how to spend a portion of their pocket money. Discuss their choices with them but allow them to make mistakes, such as spending all their money straight away on something they later decide they don’t want. Or spending all their money and then seeing something else they want desperately. There are many lessons to be learned from this. It is teaching your child that they can only spend the money that they have and to carefully consider purchases and avoid impulse buying. Far better to waste a small amount when they are young and to learn from it than waste a large amount when they are an adult and possibly get into debt.
6. Sharing Money
Encourage your child to put aside a percentage (such as 10%) of their pocket money for sharing. This can help children begin to understand the importance of thinking of others by gifting a present or money. Allowing your child to use this money to buy a present for someone else gives real meaning to present giving. Your child may also decide to help others by donating to a charity that has caught their attention. Whether it’s gifting or charity donations, important life lessons can be taught here and it stands them in good stead to become kind, considerate and thoughtful adults.
Overall remember the power of money talk with your child. Discussing money tips and ways to avoid pitfalls is increasingly important the older your child gets. Starting good habits early is beneficial but even if your child is older you can help prepare them for the future by sharing what you know, your experiences and what you have learned. The better your child’s understanding of money the more prepared they are to make good money decisions in the future.