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Feb 08

6 Great Ways to Teach Your Children About Money

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Teaching your children money skills does not have to be difficult or complicated. It just requires a bit of common sense and the commitment to make it a part of your daily interaction with your kids. Teaching money skills to your children is actually a lot of fun. Here are six easy ways you can teach them money skills and have fun doing it.

Money Skills and my Daughter

As my regular readers probably already know, I am the father of a wonderful four-year old daughter who has recently started kindergarten. I also don’t like paying more than I have to for things. I prefer to save where I can so that I have more left over for the stuff that matters most to me (like my daughter). I have also made mistakes with my money over the years, but feel that I have learned much from these mistakes. Being a father has led me to think a lot about what lessons I want to teach my daughter about money and about how I can help her to develop age-appropriate money skills.  It is from this perspective that I share these ideas with you.

#1  Show Your Kids How Money Works

It is very important to let your child see you using money and to give them every opportunity to use it as well.  Pay for things in cash when you can and let your child pay the cashier and take the change (to be taken back by you later on).  I let her keep the coins while I keep the bills.  My daughter was a bit shy to do this at first, but now she feels like a ‘big girl’ when she does it and she asks is she can pay.

This is a very powerful way of teaching your children that money can be exchanged for things other than money.

#2  Give Your Children an Allowance

I am a very strong believer in giving your child an allowance as early as you feel that they can handle it.  I started giving my daughter an allowance at three years of age.  Currently I give her $4 per week.  The reason behind my giving her an allowance is simple; if she is to learn about money she must have some money to learn with (more about this coming up).

#3  Instill the Importance of Saving, Sharing, and Spending (not just spending)

We divide up her $4 allowance into three parts.

One dollar goes into her ‘Save’ bottle.  This is money that is put aside for the future.  We make regular trips to the bank to deposit this money into her Tax-Free Savings Account (TFSA).  She deposits the coins into the coin counting machine at the bank herself, and takes the deposit slip to the teller.  I show her how her savings are growing.

Teaching Kids About Money

Teaching Kids About Money

We take another dollar and put it in her ‘Share’ bottle.  This is money that we put aside to help other people and/or to support different causes.  I have started to have discussions with her about how lucky we are to be in a position to help others and also about what charities she would like to support.  She loves orcas and pandas so I suggested the possibility of helping those animals by donating money to the World Wildlife Federation (you can tailor this, of course, to your own child’s interests).  I told her a bit about what they do and she is excited about putting her money to good use in this way.

The remaining two dollars go into her ‘Spend’ bank and are hers to spend however she pleases.  Read the complete article HERE!

 #4  Allow Your Children to Make Money Mistakes and to Experience Successes

I feel that the freedom to choose how she spends this ‘Spend’  money is very personally empowering for her.  It also allows her to experience the satisfaction of making a good purchase and the feelings after making a bad one. It is no longer my money, and I give over this decision-making opportunity to her so that she can learn.  So far, so good.

#5  Teach Patience

One way that I support my daughter’s decision-making is to tell her how much things cost in dollars and then calculate with her how many weeks it would take her to save for a given item.  “Yes, you could buy a couple of pencils and a ball at the dollar store today or you could save that money and buy that more expensive My Little Pony Doll next week.  We have two dollars today and you will get two more dollars next week.  That would be four dollars” is one example of a discussion I had with her not too long ago.  She can handle delaying a purchase for a week or maybe two weeks at this point.

#6  Enjoy Pleasurable Things That Do Not Cost Any Money At All

Make sure that you absolutely steer clear of imparting the message that you need lots of money to be happy or that money equals happiness.  This widespread fallacy is the source of endless dissatisfaction and misery for many people.  Make sure that you experience joy and happiness away from shopping malls.  This is perhaps the most important thing you can ever teach your children about money.  There are also a lot of other really terrific benefits to raising children frugally.

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Author: Jason Milburn Google

Frugal dad – focusing my money and energy towards happiness and the things that matter most since around 1985.

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