Growing up, I had minimal insights about finances; hence I am determined to educate my son about it thoroughly. As early as age 5, children naturally become inquisitive about how money works, perhaps observing transactions in grocery stores or restaurants. Providing a thorough understanding of money matters at this tender age can help to foster a healthy relationship with money. More importantly, teaching them about finances will aid them to steer clear of common financial pitfalls when they age. However, making a mundane topic like money appealing to children can be a challenge. For this reason, here are 7 unique methods to make the money talk interesting:
1. STRATEGIZED ALLOWANCE GIVING
The idea of handing out allowance to kids didn’t appeal to me initially, however, I’ve realized it’s one of the best ways to impart financial education. Without having money, kids may find it challenging to learn its management. But, I am skeptical about remunerating my son for household chores as it may set a precedent of expecting pay for basic responsibilities. My solution is to make allowance giving seem like a job. My son has to fulfill weekly duties around the house like cleaning, garbage disposal or helping out with organization tasks to earn his allowance. The catch is that he’s only paid for the work completed. Some parents make it exciting by putting up ‘job applications’ for different tasks and kids apply for ‘jobs’ they are interested in. Earning their own money allows kids to make decisions on spending and saving, while also observing the consequences of their choices.
2. PARTICIPATION IN BUDGET PLANNING
Incorporate your child in your routine budget planning meetings with your spouse. Understanding budgeting from a young age can be beneficial. Our weekly family meetings often involve discussing upcoming events and how we plan to fund these. By participating, kids get a firsthand experience on how families should discuss budgets and the importance of financial planning.
3. INVEST IN MONEY-ORIENTED GAMES
Children love gaming, which makes this an ideal approach to teaching about money. Numerous board and online games such as The Game of Life, Payday, and CashFlow are designed to give practical insights about finances. These games offer experiences such as dealing with unexpected expenses, managing money wisely, understanding assets and liabilities etc.
4. ENCOURAGE ENTREPRENEURSHIP
Starting a business as a young child can stimulate creativity and impart learning about real world finances. While not every child will start a business, they can learn about concepts like profit and loss, investing in ideas and diversification of income.
5. PROMOTE GENEROSITY
In addition to learning about expenditure and savings, children should also be taught about the importance of giving back. You can inculcate this by encouraging them to divide their allowances into spending, saving and donating. This can help them understand how to contribute positively towards society with their money.
6. INTRODUCE BANKING EARLY ON
To avoid unpleasant first experiences with banking like mine, I ensured my son had a junior savings account at a local credit union. This way, he learned how to open a bank account and also about savings accounts and interest rates.
7. EDUCATIONAL BOOKS AND VIDEOS
Thanks to the wealth of resources available, kids can learn about money through informative books and videos. Depending on the child’s understanding level, starting off with videos might be useful before transitioning to books.
In conclusion, as parents, teaching our children about finances is a rewarding task that helps secure their financial future. By adopting these seven strategies, you can ensure your children are set on the path to financial success and help them avoid common and expensive money errors.
