Teaching kids about money sound hard.
However, as parents, we should allow our children to spend all of the money that they’d been collecting over early years. We want them to know what they felt like to not have any money and then, in turn, they will know how to save and spend money wisely afterward.
To be honest parents, it’s hard to teach our young kids how to use money and how to spend it.
The concept of money is so general because they see us use debit cards and credit cards all the time, right? It’s very rare that they see us use cash, and when we do, they don’t quite grasp the subject or how money works.
Therefore, we must teach our kids with practical knowledge about money in reality.
Teaching Concept & Value of Money
Children would learn better if their parents know how to make the lessons about the concept and value of money more attractive through stories or games.
As a parent, therefore, you should create and play some simple games with the kids related to money, coins, notes, check, etc.
Do with your children in the store, you need to teach them how to learn the value of money.
Teach them how to use it, how to earn it and how to spend it. The first thing you want to do is have your kids cash in their coins so you can easily see how much money they have.
Let your kids start with the Coin Star machine, teach them how to count all their pennies, having them be hands on, touch the screen, show the machine counting their money, etc. this way will help the kids see what’s going on and interact with the experience of money.
Get them to see the number get higher and higher on the screen.
Then give them the cash receipt from Coin Star machine and make sure the cashier hands your child physically the cash so they can see the money in their hand and watch it leave when they pay for their items.
As parents, you should give your young child a chance to see the money physically moving or they don’t get the concept.
Also, you can also tell the kids successful stories about millionaires, billionaires who knew how to make money since they were a child like Warren Buffett, Steve Job, Bill Gate, etc.
Teaching the kids what money is, why people need it, how great money helps people in life. Let them know that money is necessary and it should be used in the right way.
- Teach the kids that don’t ever waste any penny.
Explaining to them most of the things in life must be paid with money. Nearly nothing is free, from cars, houses, clothing, food, drinks, study tools until other things in life.
Then we let them know that money requires us to work hard, it doesn’t grow on trees, we must create it, respect it and treasure it as well.
- Teach the kids to work for money.
That means you need to help the kids do chores, have them do household chores to earn money around the house. I will say that my little boy Danny was only three and a half, and he was doing chores.
So if you have little kids like I do, then allow them to do chores. They can dust, go around and clean all of the doorknobs. That’s what little kids can do. They can think that doing chores is quite fun.
You will probably find it interesting that your little kids may love to help their older siblings’ clean things or do other small tasks because they want to be like the bigger kids.
So it’s rather helpful to put our children to work, right?
And the important thing I want to share with you that as parents, you have to do with sticking to your goals. You have to stick to your goals.
Sometimes, your kids will be like, “Oh mom, I’ll pay you money back later” Or “I’ll do the job later, but I want money now.“
It’s like you’re giving them a reward before they’ve done the work. And little kids’ minds don’t work that way.
So you have to make sure that they do the job first, and then they’ll see the reward. You must try hard not to give into your kid’s needs.
Teach the kids about the basic concepts of money. Doing so will help them lay a strong foundation for their financial habits once they become adults.
Explaining The Basics Of Money Terms to Children
When your child reaches an appropriate age, teach him/her about the basic terms of money so they would have a general understanding of the financial world.
Here is a list of financial terms you should let your kids know:
It is a piece of paper that you order the bank to pay a specific amount of money from your bank account to the person in whose name the check has been written.
It is the trust which allows one party (lender) to provide money or resources to another party (borrower). If the borrower repays the money on time, he/she will obtain an excellent credit and have a high chance to borrow an amount of money at a low-interest rate.
It is a payment which is done by a borrower to a lender for an amount of money above repayment of the original sum of the borrowed money. It is also considered as a fee which the borrower may pay the lender for borrowing money.
It is a yearly, bi-annually, or quarterly payment made by a corporation to its shareholders, usually as a distribution of profits.
- A MUTUAL FUND
Investment enterprises operate it. It is a professionally fared investment fund that collects money from many investors to purchase securities/stocks.
- SAVING ACCOUNT
It is an account maintained by a retail financial organization (a bank or credit union) that pays interest on the money people deposit, but it cannot be used directly as money in the constricted sense of a medium of exchange.
When you own stock in a company, it means you own an ownership in the business that issues the security. As an owner, you will have the right to receive a dividend or a portion of the company’s profits.
On the other hand, if the company loses money, then you will receive or earn nothing, and of course, the value of the stock goes down.
Breaking Down the Expenses and Amount of Items
If you want your children to become wiser about money matters, as parents, you must equip your children with knowledge of expenditures for things.
Tell them that almost everything costs money.
NOTHING IS FREE.
To provide your children with the best knowledge of fees, you should increase your knowledge first by reading more books, magazines, news, sites, and then give your kids the best tips and advice on how to expense for things effectively in their daily life.
If you know that your son likes a car, you should analyze the pros and cons of owning a car.
You can tell them how much car costs, what fees we have to pay when we use a car (tax, gas, toll fee, parking space, etc..) likewise.
You can also tell them the benefits when we have a car; then you conclude that the disadvantages outweigh the advantages when they own a car they don’t have a lot of money.
Instead, you should encourage them to use that amount of money to invest into stock, dividends, real estate; they will get a chance to earn more money and become rich in future.
Likewise, you can also teach your child to save money by eating at home instead of eating at restaurants since everything in restaurants is much more expensive.
Instill the Value of Hard – Earned Money to Children
Work hard and be rewarded!
Don’t let our children stick into a bad habit of waiting until the last minutes and ask us for money. At their early age, they obviously don’t know how hard we work for the money. They just think that we are a cash machine, and money always comes from us. They believe that we are always ready when they need money for snacks or toys.
When teaching kids, we should let them know that we have to work hard to get money. Explain to them that money doesn’t come quickly, it requires us to work for it. Money doesn’t come from the parents as well, and it doesn’t come from the trees either. Let them know we are not a money machine.
Teach children that when they work hard, they will be rewarded in return.
Note that we must make the topic more interesting by telling them several hard-work stories for kids like the story of the ant.
In this story, the ant even though small, but they are diligent, they keep themselves working all day to collect food, build the house, and prepare everything for the coming winter.
On the other hand, we should also tell the kids adverse consequences that independent individuals may suffer from if they are lazy like having no food to eat, no clothes to wear, no houses to stay and particularly we will have no money to help people who are in need.
We can take the character grasshopper in the story as an example of this. In the story, the character grasshopper is so lazy; he just spends time playing guitar all day without working hard, when the winter comes, he has nothing to support himself but asking the ants for a favor.
The story will help the kids feel more interested in learning from it. They will have more fun and can learn about the values of working hard in life as well.
Let them know that working hard will not only help us create happiness, meet our basic daily needs such as food, clothes, houses, but help us know about the value of earning money.
These things, of course, make us survive and grow. Also, hard work also allows kids to have a chance to earn money and buy whatever they like such as gun toys, bicycles, dolls, etc.
Teach the kids that through working hard, we will learn a lot of new things, get more experiences and become smarter in life.
Make clear to the kids that they will always get rewards for their hard work; motivate them to take action, do more chores, giving and being helpful to others more often.
Like I said, remember that we must be rewarding the kids for the work they complete as we promised. It doesn’t matter how the work they do, where the work is done as long as they deserve to pay when they complete all these things.
Encourage the kids to do chores is an excellent way to help them work hard and develop their life skills at the early age. Assign them four to five tasks with the understanding that they must work hard if they want to get a reward.
The jobs we offer them should be suitable for their ages, hobbies such as collecting rubbish, picking up toys, cleaning the house, preparing food for the family, washing dishes, etc.
Note that children will become smarter and more successful in life if they have a chance to interact with money and develop their skills since they were still young.
As parents, we should encourage our kids taking more action since we know that the more they do, the more they learn, the earlier they take risks, the sooner they will be successful. This is a great technique for parents to teach their kids about money.
Commission vs. Allowance
As a parent, we should reward our child with a commission instead of an allowance. An allowance just means an amount of money that is enough for our child’s daily expenses.
That is the price that we pay our kid each day or each week. Also, a commission will get our children become more excited and hard-working if they want to get rewards.
The allowance is significant. It is the gateway of budgeting. It will teach the kids how to set boundaries when it comes to money.
Compensation pay to a child not for money but actual expenses. This means the child probably reach at the age of seven or eight before you introduce an allowance.
To be straightforward, you get a piece of paper, talk about the expenses in your child life and help them take charge of all of such expenditures, maybe their lunch at school and then give them that money to manage over a period.
Everything needs to be done in an appropriate way. At first, give them one week allowance to handle and tell them that they can use the money to spend for lunch at school, or they can keep it by eating at home during break time.
Start giving your children choices when it comes to money, and allowance is a great way to start to give kids options.
Research shows that parents should allow their children get a “commission,” instead of an allowance, for doing certain chores. Sometimes, we can require them to do general housework without payment.
Let them know that we do so simply because they are parts of the family.
- Why do parents do this way?
Because in real life, we only get paid for what we are hired to do. In contrast, we will get no payment for things that we have to do since we are part of a family or community.
Teach our kids that if they want to get paid, they must work for it.
For example, you tell them to pick up litter to keep the city clean, or help parents do chores at home, then you pay them as a commission.
- Why don’t we give them an allowance?
The truth is revealed that if parents give their kid an allowance for doing chores, it does not help them learn how to make money and they will lose the chance of learning the lessons from working to make their money.