5 Ways to Teach Kids the Value of Money
Being able to manage money effectively and make sensible decisions concerning it doesn’t just happen. We need to specifically teach children the value of money, and do so in age-appropriate ways. This is particularly necessary as marketers have refined pester power in every media channel from TV to YouTube, and kids’ magazines to online games.
Financial literacy should start young and gradually build in scope and complexity. Given that money doesn’t simply grow on trees, it’s important we know how to teach kids the value of money. Here are our 5 top recommendations:
1. How to teach kids the value of money: Play
With young children the simplest and most direct route to learning is through play. Very young children will have little to no concept of money, or its value. However, they need to start somewhere and there are plenty of play-based opportunities to help.
Pretend shops with play money are an ideal role-playing game for pre-schoolers. Here you introduce the concepts of supply and demand, and exchange of cash for goods. At the moment don’t worry too much about ‘amounts’ – of course young children won’t have the numeracy required. However, as they develop you can introduce additional concepts such as change or the value of expensive items versus cheap ones.
2. How to teach kids the value of money: Games
Beyond play-based learning it can be helpful to structure some of their financial learning by using games and aids. There are a vast number of different options according to the age and interest of the child.
You can introduce online money-based games for any age group. Apps such as Amazing Coin and £-Fun are ways to make sense of UK coins and notes as well as begin to understand the value of money. Then there are some excellent board games which will give you the tools to teach kids the value of money. Monopoly Junior, Money Snap, and Money Bags are all fun and engaging money-based board games for kids.
3. How to teach kids the value of money: Pocket Money
Once children have some basic understanding of numbers and coins, you can introduce pocket money. For some children this will be possible from around age 4, for others they will need to be a little further into their primary school years.
How much pocket money you give and helping your children to manage it (and make mistakes) will give them valuable lessons in financial literacy. The average amount of pocket money a child in the UK gets is £9.70 per week. However, this will vary by age. What you should be aware of is that - shockingly - there is even a gender gap at the pocket money level. Girls are receiving 20% less pocket money than boys. Make sure you don’t pass on that bad money lesson!
Use a method of keeping track of your children’s pocket money such as apps like Rooster and iAllowance. Then help and guide them to work out how to spend and save their money. Don’t forget to let them make mistakes, such as buying that tat in a gift shop and therefore not being able to afford their Friday sweets! This way you do really impart the concept of value.
As children get older, you’ll need to introduce a few more concepts. Perhaps they can earn extra pocket money through completing additional chores such as washing the car or raking leaves. As they get older still, perhaps their pocket money should turn into an allowance, giving them greater learning opportunities for financial management.
4. How to teach kids the value of money: Go Out
We all learn best through practice. The same applies to kids learning about money. From their preschool years they can help in the supermarket as you select and choose items based on price and value. As they get older they can help with family money-based tasks such as booking tickets to the cinema with you, or getting a short shopping list of groceries.
By gradually increasing the responsibility given to your child when it comes to money, they will grow in confidence. They will also grow in understanding the value of money. As children grow up they can be given age-appropriate budgets for days out and holidays. In this way they learn how far money goes and how to spend sensibly.
Also take opportunities to let them help to earn money. At school fairs have them behind a stall with you where they are responsible for taking payment and giving change in a safe setting. Sit with them to count the takings. Let them take responsibility for running a holiday-time stall for visiting friends and family and encourage an entrepreneurial spirit.
5. How to teach kids the value of money: Spend and Save
Once your children have built the foundations of good money understanding, and as they head towards senior school age, you can begin to teach them the tools of the trade.
There are some tools and accounts that, with parental help, can be used for primary aged children. These tools, such as GoHenry and Santander Mini 123 help children learn the concept of electronic money, making payments, reading statements, tracking expenditure, and saving.
Once your child reaches 11 there will be far more opportunities for learning how to spend and save more independently. The TSB Under-19 account, Lloyds Under-19 account, and Halifax Expresscash are all consistently well reviewed. These accounts typically offer a debit or cashpoint card. This helps young people learn to take responsibility for their money within common transactions but also within a safe framework.
Teaching children about money and its value is an essential life skill which we need to take responsibility for. This generation of children is growing up in a consumer-focused society with the opportunity to spend is frequently placed in front of them. To navigate this world as adults, and ensure they don’t end up struggling with debt, they need to be given the right foundations. Those foundations start with financial literacy within the safety of the home.
Make learning about money fun and rewarding, and they will grow with the confidence needed as financially literate adults.
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