How to Teach Your Kids About Money
“Financial literacy lessons should be introduced at an early stage of schooling. Basic concepts like budgeting, saving, and the importance of credit should be integrated into the curriculum” ― Linsey Mills
3 min read
How to Teach Your Kids About Money
“Financial literacy lessons should be introduced at an early stage of schooling. Basic concepts like budgeting, saving, and the importance of credit should be integrated into the curriculum” ― Linsey Mills
3 min read
As parents, one of the greatest gifts we can give our children is the knowledge and skills to navigate the world of money with confidence. Teaching kids about money from a young age sets the foundation for a lifetime of financial responsibility and success.
Today, we are providing you with the top 5 areas to start with to improve your children’s financial literacy.
Start Early with Basic Concepts
Introducing basic money concepts to children as early as 3- to 5- years of age can be highly beneficial to a child’s development.
Of course, this does not mean showing them online courses or 45-minute videos, but you can use everyday experiences like shopping trips or providing an allowance to teach them about coins, notes, and simple transactions. This engages them in counting money, distinguishing between different currency amounts, and understanding the value of each.
Another helpful tool is to utilise hands-on learning by allowing your children to handle coins and notes, fostering a tangible understanding of currency. Should this become part of their daily or weekly routine, children can develop a strong foundation that sets them up well for the future.
Teach the Importance of Saving
Accumulating savings is an important aspect of financial success. If you provide an allowance, emphasise the importance of saving a proportion for short-term and long-term goals. For a child, this is likely to be for items such as toys, gadget or perhaps more longer-term goals like future education expenses.
Provide them with piggy banks or clear jars to visually track their savings progress, too. Teach them the concept of delayed gratification by setting goals and rewarding them when they achieve them through saving. Making the process fun and visual is a great way to keep your children interested in the topic!
Additionally, involve your children in decision-making processes when it comes to spending and saving. For example, when they receive money as a gift, discuss with them the options of spending it immediately versus saving it for something they truly desire. This encourages them to think before they spend and make informed choices whilst also developing a sense of ownership over their own financial decisions.
Make Learning Fun with Games and Activities
Create games and activities, and use interactive tools to make learning about money enjoyable for kids. For example, board games like Monopoly or The Game of Life offer opportunities to teach concepts like budgeting, investing, and risk management in a playful manner.
You also have access to online resources, apps, and educational websites that can provide engaging ways to learn about money management and won’t take up 3- to 6-hours of your weekend!
Moreover, consider planning family activities that involve financial decision-making, such as planning a budget-friendly outing or setting up a pretend shop at home where children can practice buying and selling items using play money. Hands-on experiences like these not only reinforce essential basic financial concepts but also promote critical thinking, problem-solving, and teamwork skills in a fun way that they are more likely to remember.
Practice Responsible Spending
Teach your children the value of responsible spending by involving them in (age-appropriate) decision-making processes. Give them opportunities to make choices about spending their allowance or gift money, emphasising the importance of needs versus wants and prioritising purchases. Compare shopping styles and discuss the impacts of impulsive buying.
You could even consider implementing a ‘savings matching’ scheme where you match a percentage of your child’s savings contributions, incentivising them to save more and spend wisely. This not only reinforces the habit of saving but also teaches the concept of delayed gratification and the rewards of positive financial behaviour.
As your children become more financially literate, gradually introduce them to more complex topics like budgeting for larger expenses and understanding the impact of interest rates on loans and savings.
Lead by Example
Perhaps the most important point in this article, and one of the best ways to teach your kids about money, is by modelling responsible financial behaviours yourself.
Be transparent about money matters, involve children in family financial discussions, and demonstrate responsible financial habits like budgeting, saving, and investing. Use real-life examples to illustrate financial concepts and reinforce the importance of smart money management.
Explain the decisions you make and the reasons behind them, showing them practical applications of good financial principles. By seeing your financial decisions first-hand and understanding the rationale behind them, children can develop a deeper appreciation for the value of money and the importance of making informed choices.
Start Educating Early
Teaching children about money from an early age is one of the greatest gifts you can give for their future financial success. You are able to instil habits that will last throughout their lives and enhance their decision making immensely.
With Patterson Mills, we provide various resources and guidance that can assist you in teaching your children about money. In fact, for our private Clients, you can even bring them along to a meeting if you wish!
The main point to take from this article is that a financial education is invaluable for your children and, together, we can assist the next generation in achieving achieve financial independence and success.
So, get in touch with Patterson Mills and book your initial, no-cost and no-obligation meeting. Both you and your children will be glad that you did.
Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.
Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.
