Involve them as much as possible
The best way for your children to learn how money works is by being involved with it first-hand. Let them pay for their items with cash and help them count how much they started with and how much they now have after their purchase. If you’re planning a family holiday, work with them to plan out some activities and the costs, and talk to them about how much they will need to save if they want to do those activities. You can keep a visible tally somewhere like the fridge so they can see where they’re at – kids love a challenge!
Make it playful
If you have younger children who might not quite grasp the concept of saving yet, you can introduce them to money through play. Small supermarket toys are a great way of doing this, they can play shopkeeper and you can practice exchanging money for items. You can also let them play with the different coins so they learn how much each one is worth. Once they get the idea, they can start to learn that more coins can mean they have more money in total – this is a great intro into the practice of saving money.
Pocket money is key
It’s hard to talk to kids about money if they can’t see it for themselves. Giving them their own money is a great way to get them to understand how it works. Let them earn their pocket money by doing chores around the house to learn that money needs to be earned and once you spend it, you’ll need to earn more. Talk to them about costs and value, even if it’s as simple as ‘this store has the toy you want at this price, but this store has it for this price’ – if you buy at this store you’ll have this much leftover, if you buy at the other store you’ll have this much left.
Let them make mistakes
Once kids realise they can afford a certain toy or treat, that will likely become their main focus and they won’t be aware of the consequences of spending all their money at once just yet. It’s a good idea to let them learn for themselves that if they spend all of their money on something, they won’t be able to add any to their savings for that trip, or for something else they might have been looking at. Explain this in an objective and calm way – the last thing you want to do is make them feel guilty around money. Just explain the pros and cons of each choice and they’ll get the idea and hopefully weigh these up better next time.
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