Teaching Kids About Money

You are reading this page because you want to find more information on how to teach kids about money. You will probably agree with me that these days, schools all around the country and the world have been lacking the commitment or expertise to educate our children. I find this deeply disturbing and want to create a better way for our kids to learn about this.

Teaching kids about money is so vital and is a tool that they will need to use for the rest of their lives. Why not start them early? Should we just leave this to the school system in the hope that the teachers there will teach kids about money? What’s the chance of them showing our children what the value of the dollar is?

In these times where the global economic crisis has just occurred, we want to educate our children more than ever what to do with money they have received. How do they save properly? What about budgeting, or managing their finances? To equip our children about the knowledge of money is such a huge advantage to them later in their lives.

The proportion of children with financial literacy all around the world is very low. They don’t start understanding fully this concept until they reach their later teen years, therefore wiping out years of opportunities in their earlier years to see what money can do for them.

When we – the parents/guardian – want to start teaching children about money, how do we do it? Are there any methods or techniques that are needed here? Each age of the child requires different ways of teaching kids about money.

Benefits

The benefits of teaching kids about money is numerous and they include the following:

1. Saving -  When teaching money to children, a lot of it comes down to how to save properly. When kids start off in life, they might have a piggy bank. They are later introduced to savings account in banks. A good bulk of teaching children about money is how to save effectively and the correct way to save properly.

2. Budgeting – Financial literacy for kids is largely dependent on how they budget properly. Budgeting for kids is essentially being able to allocate their pocket money or allowance to different areas such as saving, food, entertainment and clothes for example. Budgeting is a good way for teaching money to children. Good money habits are developed when kids can budget properly. For parents, to teach good money management for kids in this area is essential to how they will look at money later in their life.

3. Investing – When we teach kids about money, we want to empower them with the knowledge or the foundations of how to invest. Financial education for kids in this topic is a bit more advanced and is probably left to your child when they are teenagers. To invest properly in property or shares is an important tool to create wealth later on in their lives.

4. Allowance – This is giving a weekly payment to your child so they can experience how to be financially responsible. Teaching money to children with allowances is a great tool so they can see what the value of money is and how it is used in co-operation with budgeting and saving. The financial literacy for kids increases greatly when they know how to utilise their allowance to their full advantage.

5. Making money – Teaching children about money will enhance their financial literacy skills and thus will encourage ways to make money from an early age. When they are adults they will be required to earn money for their families. When we teach kids about money, we can explain what we do in our jobs, and that when we work,  we are paid a salary or income which then is used to pay the bills in the family.

Most of all make it fun when teaching kids about money. There is nothing worse than pushing your child to learn about this subject to the point where they just start resenting money altogether. When teaching money to children, remember that you must take the initiative to start educating them as schools are most likely not going to touch this area. Teaching children about money will pay off in the long run so don’t quit if you don’t see any immediate results, just keep on pushing through and you will surely reap the rewards later.