Teaching Your Kids About Money

Teaching Your Kids About Money

Here's how you teach a 6 year old all about money...

Recently, my 6 year old started learning how to count money in preschool. She was excited because playing grocery store and cafe are her favourite pass time. She also enjoyed role playing at Kidzania, but learning the concept of earning and spending is only scratching the surface on the topic of money.

Cashing her cheque at Kidzania

Cashing her cheque at Kidzania

I strongly think that teaching your kids about money from a young age, is important. By showing children the basics on how to budget, spend and save, this will establish good money habits for life.

How much is too much information for their age? The last thing I want to do is to complicate things for them. Here’s an age-by-age guide I found on introducing money to kids, but I personally like this comprehensive one by Forbes. Using real life examples to explain can really help them to understand as well

When can you talk to your kids about money?
At the ATM
image source: flickr

image source: flickr

My daughter use to think that it was just a machine that gives out money whenever you wanted it. I had to explain that the ATM only holds the money that was earned by working hard and saving in a bank. I also explained that when you take money out from your bank account, you will have less in your account to spend later.

At the Supermarket
image source : Jewelpie

image source : Jewelpie

How about trying to explain how items are priced at the supermarket? Explain how there are cheaper or more expensive versions of the same product. Try playing a game of comparing prices and picking the cheapest one.

Paying bills
image source: av2day

image source: av2day

Show them your utility bills and explain that it costs money. For example, you could explain that to pay a RM170 electricity bill, you had to work x amount of days work to earn the money. Teach them how they can help to save on utility bills by not leaving lights and appliances on.

At the Toy Store
image source: midvalley

image source: midvalley

This is classic. I am always subconsciously teaching my kids wants and needs in the Toy Store. Here we also teach them boundaries by setting a price limit.

Other times we tell them we’re just window shopping, or only here to buy a gift for a cousin or a friend. My kids quickly learn that going into a store doesn’t always mean they will be getting something. Later on when they start having their own allowance, they can then learn to save up for something they really want.

At the Bank
image source: bloombergtv

image source: bloombergtv

 
Bringing their piggy banks to the REAL bank to open a savings account teaches them about “growing” their money. Naturally, I had to explain it in very layman terms to my 6 year old.
 
I explained that the banks uses the money from their savings and putting them into projects that earn money. The bank later puts back a portion of what was earned from that project back into their savings account and that’s how their money can “grow”.
 

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