Image of girl in glasses scratchign her head with money in her hand

Tips For Teaching Your Child About Money

It is important for children to understand money in our society. The skills of budgeting, spending and saving can be introduced at an early age. Especially today, when children will often not see money involved in a transaction, it may not come easy to them to understand the value of money and it uses.

You can begin with your young children (about 4 or 5) to explain that you need money to buy things; and that you can earn money by going to work; money comes in coin and notes of differing values and that there is a difference between the things we need and the things we want.

Some ways to talk to your children about money:

  • At the ATM – let them see the money you have and the different values of the notes; explain to them how the money gets there so you can get it out.
  • For small purchases, let them give the money to the shopkeeper or cashier. Sometimes if they give one coin and get three back they can think they have more. It can take a while to understand the maths behind money.
  • If the opportunity arises, use words associated with money: budget, saving, interest, bank, loan, credit.
  • Role play shops with your child – buying and selling.
  • Use a clear jar for your change and occasionally invite your child to help you count it.
  • As always, try to set an example in the way your use your money.

Some websites that offer practical suggestions are:

Parents → Teaching Kids About Money: An Age-by-Age Guide
Child Development Institute → How to Talk to Kids About Money

The issue of pocket money

A wide variety of attitudes exist around this topic so it is important to be clear on your attitude. Some things to consider include:

  • to give pocket money or not;
  • how much to give;
  • what are your expectations about the use of it;
  • will it be for chores done?

Having pocket money can help a child understand its uses, and also the consequences of losing it, and that there is usually a choice to be made as most often money is not limitless.

 

At Angel’s Paradise, there are opportunities for children to practice using play money.