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How and When to Teach Kids About Money

By Lauren Leisk, Yahoo!7 Moneyhound January 21, 2013, 8:00 am

Even if kids don't fully understand maths they can still learn about how money works from an early age.


In the current global climate, children are constantly surrounded by round-the-clock financial news and information.


However, helping them apply it to real life and bringing them up to be financially savvy is primarily down to parental guidance and some real-life example setting.


Starting young


If you’re unsure of what age to start teaching your children about financial responsibility, the answer is now.


Young infants can start to get a feel for money exchange by playing with toy shops or being allowed to hand over the coins for your morning coffee. Always encourage children to make stalls, selling products like homemade lemonade from the front door, or holding a garage sale of their unwanted books or toys.


Related: Practical examples for raising financially minded children


In their pocket


Pocket money is an almost essential part of childhood, so make sure you set a specific amount and create a ritual of handing it out each week. This can progress into a monthly allowance, which you might like to offer via a prepaid debit card for older children and teenagers to familiarise them with payment methods and the concept of only spending what they have.


Budgeting


Help your children create a budget for themselves, through which they can spend their money and you can encourage them to make more themselves in order to supplement your donation. If they have been begging you for an iPad or new t-shirt, teach them how to work out how much they’ll need to save each week to earn enough money for the purchase.


Related: How to teach kids good money habits


The cost of living


It’s all very well teaching kids how much money to spend or save, but they need to grasp the concept of what things cost as well. Material items are fairly easy, especially if they’re price-tagged in a shop. However, show children why you nag them to switch off lights or limit calls to mobile numbers by presenting them with electricity or phone bills to help them to draw the connection.


High interest


Take advantage of the high interest rates offered on kids’ bank accounts by setting your child up with a savings account that they can top up and track the interest on. They’ll be far more likely to save if they can see their balance going up as their savings make money.


Investing in your children is extremely worthwhile. Financially savvy children will hopefully grow into financially independent adults, who may even treat you once in a while!


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