If you have ever seen the look on a toddler’s face when they hold a few dollars in their hands, you know that kids love money!
While most daycares and schools tend to avoid the topic of money with children, here at Cornerstone, we believe greatly in the process of developing skills that children will have for life in addition to their ABCs and 123s and money is one of those skills!
A study in the Journal of Consumer Affairs found in fact, that financial education early in life benefits people in adulthood.
But many parents aren’t sure where to start with the topic. How do you teach you kids the basic skill they need without making the process complex or difficult to understand?
Starting with the basics
One of the very first lessons that children should learn about money is simply the fact that it exists and it plays a role in our day-to-day lives. Experts believe that children as young as 3 years old have the ability to understand money and how you trade it for goods and services. The sooner your child is introduced to the concept of money, the sooner they will be able to pick up on more concepts that are very important.
A good place to start is by allowing your kids to help you make small purchases. Next time you are about to buy something small (like some gum or a drink) allow your child to hold the money and hand it to the clerk explaining along the way what is happening. That small exercise done enough times will help the basic concept of money take shape in their heads and allow them to understand handing over the cash gets you something in return.
It’s never too early to teach them about saving and delayed gratification
One of the key things that many parents want to teach their children about money is how to save it. When a child has a birthday or other celebration that suddenly gives them an influx of cash, they tend to get excited to spend it all faster than they got it! While it is great to still let your child buy themselves a few things with that money, it is also important to teach saving habits very early on. From the beginning, many parents will either help their child set a percentage that they will save, or teach them about saving a flat amount every time. Either way, those saving habits are starting to develop.
When kids are little, setting up a piggy bank is a great way to do this. That way, a child can see the actual money entering the bank to help them grasp the concept of the money being saved. As they get older, bring your child along to open up their first bank account and show them exactly how the money gets saved in their accounts.
Through these habits, your child will learn the importance of not spending money right away and the benefits of saving up now, to get something even bigger later. This idea of “delayed gratification” is a skill that will not only help them with money when they are older but also other areas as well. It’s all about helping them find the balance!
Money doesn’t grow on trees, it is earned!
The final thing that helps teach your child the value of money is by showing how it is earned. I think we can all agree that it would be nice if money grew on trees, but unfortunately, we need to work to get it.
For children, this idea is a foreign idea at first. You might drop them off at daycare and they may know that you go to work, but they might not understand the fact that going to work is how money is earned.
Most parents tackle this idea the old fashioned way – assigning chores. For the little ones, something as easy as “helping” with dishes or picking up toys is enough to earn a dollar or two. As the kids get older, tasks like cleaning, vacuuming, and helping in the yard are all great options to teach the process of how money is worked for and earned. Be patient in this process as some children still struggle to see the benefit of the payoff at the end, but with enough time, you can show that working hard has big benefits!
Teaching kids about money as soon as possible help set them up for great success in their futures. Money is one of the biggest stresses of adult life and the lessons you teach them now can better prepare them for handling money in their adult life!