Teaching kids about money at a very young age lays the foundation for good financial habits. The sooner you teach your little child about money, the better equipped they will be to manage their finances and make sound financial decisions.
However, teaching kids about money is not something that comes natural for most of us. Most parents don’t want to talk about finances with their kids until they are old enough to start handling their own money. But it is sometimes important to change that approach and start conversations about money as early as possible. Having an open, honest, and age-appropriate money conversation with your children will help them build a strong foundation for managing their finances in the future.
So, what are some things that you can do to cover these important money conversations? Here are some tips on having discussions about money with your kids:
How Do You Teach Kids About Money?
Preschoolers are just beginning to understand abstract concepts like money, and it is helpful to talk about money at this age. You can take advantage of early childhood development by setting aside time for this conversation.
1. Teach Children The Value of Money
One most important step in teaching kids about money is to teach them the value of money. You can begin by asking your little child what they personally think money is worth. Then you can use this opportunity to discuss the importance of money.
Additionally, you can take your child shopping to teach them the value of money on a small scale. You can take your children to the grocery store and allow them to choose one item that they want to purchase. This exercise provides an opportunity to discuss how much money they will need to buy the item and how they can earn this money.
2. Teach Children Different Forms of Money
When teaching your kids about money, it is important to teach them different forms of money and how they can use it. You can start by explaining the different denominations of coins and how much each will buy. It is also important to explain how some companies only accept certain forms of payment. This will help them understand why it is sometimes difficult to pay for something with change.
You can also use this opportunity to teach your little children about credit and debit cards and explain how these work. Of course, preschoolers may get confused about these explanations, so try to utilize some materials to aid them; you may choose pictures of money or use your credit card to explain how they work and their different values. Remember to make it simple and fun.
3. Teach Children Good Money Habits
Teach children what it means to be financially responsible by setting a good role model for yourself. If you want your young kids to develop good saving habits, they need to see you making smart spending and saving choices.
Additionally, talk to your kids about the importance of saving their money. Preschoolers may not completely grasp this concept, but you can encourage them to save what they can and explain that if it is not spent now, it can be saved for future purchases like a candy bar or toy.
4. Discuss Different Values and Inner Beliefs About Money
You may also like to teach your kids values around money, such as donating to help those in need, not being wasteful, developing a sense of gratitude, and treating other people of all economic backgrounds respectfully.
5. Teach Your Kids How Money is Earned
You can also teach your kids about the different ways that money is earned. This might include teaching them about the different types of jobs and how these jobs help people earn money. Or, you can simply explain your jobs and how this helps your family earn money.
6. Practically teach Important Concepts
While you should talk to your little kids about all these concepts related to money, using the activities and games listed below is an excellent way to let children experience these ideas and practically understand them.
Talk to children and give them real-life experiences, and they’ll understand the concept of money in practice. Also, they’ll be able to make that money decision with a level head the next day.
6 Fun Money Activities for Preschoolers
Here are fun activities you can do with your kids to help them learn about money in a fun and practical way:
1. Create a Piggy Bank
Piggy bank is one of the most effective ways to teach kids about money and financial discipline. You can also have your children make their own piggy bank and paint it as they like.
You can make three jars.
- A jar for saving money – the money can be taken to the bank and deposited into a savings account.
- A jar for spending – you can use this jar to purchase toys, books, and other things children want. This helps help to have a savings goal.
- A jar for donating – you can use this jar to donate money to people in need.
2. Set Up a Play Store
Pretend play is a great way to promote creative thinking, imagination, social skills, and emotional development. Children learn a lot of different things from pretend play. They learn about money concepts, saving, paying bills, and developing financial skills that enable them to make good choices for themselves. You can use pretend to play in a variety of ways to teach your child about money. You can use your home as a store.
You can set up different items for your child to purchase at the play store, such as food, house items, and toys. Set up the play store in an area convenient for your children to operate.
3. Make a Grocery List
You can also have your child make a grocery list with items that she would like to purchase. You can break down the different price categories and explain to your child how much money it will take in order to buy the items on the list. Make it a family activity, have your child get help from her siblings, and take turns filling the list.
4. Take Your Child to the ATM
You can also go with your little child to an ATM and teach them how it works and what they can do there. In addition, you can discuss that having a checking account teaches children how money is earned.
5. Fish for Coins
Use a fishing rod from a kid’s fishing game or make a rod with a string and a magnet hanging off the end. Put a variety of coins into a blow-up pool and fish for coins instead of fish.
Select one denomination and ask your kid to fish out all the same coins, or fish out all the coins and make piles of them, sorting them into their denominations.
6. Collect Currencies
You may start your own collection of coins and notes and start teaching your children about currencies. When a friend goes to a country with different currencies, ask for some coins to add to your collection. Start a scrapbook where you paste the collection of coins. Indicate the country, the currency, and the denomination for each note.
Despite your child’s age and ability, it is never too early to teach them lessons about money and how to manage it. It is equally important to teach them the right values surrounding money. These lessons can set the stage for a successful financial future. Reading and talking to children about money will help them understand how they can earn, save, and spend it.
Baby Steps Daycare is not only committed to providing the highest quality childcare for the children of our families but also to prepare them for a bright future. That is why we strongly recommend you enroll your child in NY Baby Steps for an early start to their financial lesson and success. We will help them develop financial literacy that will allow them to learn and do more as they grow.