5 Ways to Teach Smart Money Skills to Children
Have you ever heard a mother tell her child, “You don’t know how hard it is to earn money so you can go and waste it”? Maybe you’ve said something similar yourself? Indeed, it’s a very common complaint, but it’s also true that children don’t understand because they haven’t yet had the opportunity to do so. That’s why it’s so important to teach smart money skills to children from the time they’re very young.
We can’t judge children, especially when they’re very young, because they don’t understand concepts such as money, budgeting, and salaries. Financial education is usually reserved for adults.
But for a moment, let’s do an exercise in empathy. Let’s try to put ourselves in the shoes of that four or five-year-old child who wants to explore anything and everything that catches their attention.
What’s more, that child has always had food whenever they wanted it, has had toys, clothes, a house, and certain other whims. Can we judge them because they want this new board game or that new doll? No, because they haven’t had the opportunity to understand how money works in the world in which they live.
Why is it important to teach money skills to children?
One of the great experts in financial education is Javier Calvente, entrepreneur and expert in the digital world and household finances. That’s why we consider his opinion in this field to be important.
According to Calvente, the importance of financial education in children is key because, as they develop, they discover that they must face new challenges for which they need to be prepared.
Undoubtedly, knowing how to manage finances is one of the greatest challenges that parents will face. After all, the present and future well-being of their family depends on it. But not only that, the example they set and the lessons they teach will help their little ones understand the monetary value of food, health, and even how to manage their free time.
Strategies for teaching children to use money wisely
That said, let’s look at some strategies and tips we can provide you with to teach smart money skills to children. That way, they learn to use money wisely because they’ll know the concept well.
Set a good example in order to teach money skills to children
Remember that children learn a lot from their elders. Therefore, if at an early age, they see you being responsible and budgeting your finances wisely, they’ll see the intelligent use of money as the norm.
Talk to your little one so that they know why you can buy certain things, but maybe not certain other things because they’re too expensive or unnecessary. Explain the need to save, show them examples of right and wrong, and don’t be afraid to explain why you’re making certain financial decisions.
Involve your children
It’s also a good idea to involve children in family finances from a young age. It’s not a question of them managing accounts, but of them knowing what the different budget items are used for. For example, for food, clothes, books, etc.
In this way, you can involve your little ones in family shopping. When you’re at the supermarket, for example, you can assign them a small budget to buy what they want. That way, they have to adjust their choices to the limited amount of money you give them.
Set up an allowance to teach children how to use money
Many adults, as well as some children, have an erroneous understanding of the concept of allowance. After all, when they need something, parents meet that need. So why add an allowance? It’s simple, to introduce children to the concept of saving.
Children will receive a weekly or monthly allowance for their private use. However, they’ll have to use it as they see fit without exceeding the limit. This way, they’ll understand concepts such as savings, administration, etc.
Games and new technologies will also help children learn strategies for saving and using finances. There are many elements, from YouTube channels specialized in this subject, to mobile applications that help them learn while having fun.
Teach money skills to children by the stages of finances
You can establish the stages of finances according to its use, but also according to how to obtain it. In other words, a first stage would be the way to earn it. Then comes the saving stage. Finally, the spending or investment stage. All of this creates a story similar to that of the financial pyramid adapted to the youngest members of the family.
We hope that these five ways to teach children to use money wisely will help you teach your children to understand the value of money, its importance, and the need to manage it correctly.It might interest you...
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- Jiménez, A., Jiménez, E. (2016). Olvídate de tu cerdito y pon a crecer tu dinero: Aprende desde joven a invertir inteligentemente. Amazon Independently Publishing.