A majority of us have not had any education in money management, or are struggling with our finances. Although the situation varies from family to family, and you might feel that your upbringing in financial literacy is poor, you have to take the first step to help your children start out in the right path by teaching them. There are so many resources available in your library, community, and the Internet. Many of these are free and I will be providing some areas where you can brush up on your money education so you can pass that on to your children.
It is very important to teach your children about money at an early age. Usually, we should start about 4 to 5 years of age because that is when children can start making some simple decisions. However the teaching needs to be very simplistic because too much information will frustrate you and your child.
Four to Six Years of Age
At these ages children are very hands-on. Here are some simple lessons you can implement right away:
• Play Money – Purchase a set of play money from the dollar store and start with basic introduction to bills and coins. Explain the value and purpose of each item. Let your child notice by touch the difference in coins, such as the different sizes and how some coins have smooth or rough edges. Show them the different numbers and faces on the bills to help them differentiate. My son learned the different values of bills by identifying the presidents. So at the same time as learning the values, he was learning some history. So when I would say Jackson, my son would hand me $20.
• Play Store – My son’s grandmother got him a toy cash register with a price scanner. My wife and I would put pictures of different coins and dollar bills on small items around the house and would play store with him. We would take turns either being the buyer and the cash register operator. This would help him in seeing if he could match the picture of the money on the item with what he had in his hands.
• Savings – At these ages, do not get discouraged if they do not grasp the idea of saving. Children at this age do not have a good concept of the future. They are at an age where money is supposed to be used now, and to them money seems to be always available when needed. However, there are some ways to introduce the idea.
• Piggy Banks – One way to introduce savings is by using a piggy bank. Today, piggy banks have taken different shapes, like a talking ATM (automatic teller machine) to games. For a fun twist look www.moonjar.com, where money is saved in a boxes for something special.
• Books – There are also children’s books that teach children saving in a fun way. Read to your children It’s a Habit, Sammy Rabbit! At the company’s website, www.itsahabit.com, they have links to a wealth of resources for parents and educators.
• Credit Unions – I am a big believer in credit unions. Take your child to your credit union and open up a youth savings account. Many credit unions will give your child a piggy bank and some fun activities related to money and savings. What I started doing since my son was 3 years old was giving him my loose change so he could put it in his piggy bank. The piggy bank that the credit union gave him was clear so he could see it going from empty to full. At the same time, I would ask him to identify the different coins from the activity on the play money. Since he was so used to identifying the presidents on the bills, he started associating the presidents on the coins. When he would see his piggy bank filled up, he would say “let’s go to the credit union and have the machine count it.” Some credit unions have coin counters and this is a good interactive activity. As my son got older, he is 6 now, he understood more about the value of money and prices. If he saw something that he wanted for $9.99 at the store, he would ask he could have $9.99 from the counted change to buy his item. He now understands that his money is the credit union for safe keeping.
I cannot say that our family finances are perfect, but hopefully I can teach my child how to avoid the same mistakes we made. I learned about finances on my own. I want my child to be prepared.
These are just a few simple ways you can engage your child to learn about money. Your child will not learn about money by himself, he needs you in the picture.