Spending and Saving

Introducing Your Kids to Good Money Habits in Early Childhood

Teaching your kids the importance and value of money will eventually nurture good spending habits in them. Here’s how to do it.

Among the first few things that most small children learn about money is that we can use it to buy stuff. They’re unaware of how this scenario will change when they grow up. That’s why they need to learn about other phases related to money.

Teaching your kids the importance and value of money will eventually nurture good spending habits in them. Here’s how to do it. 

Teaching Toddlers to Kindergarteners

The youngest of the lot first needs to identify coins. Show them how each coin is different from the other and what it’s called. Then do the following:

Pretend Play

Kids love to pretend play grocery store games. Create a small imaginary store somewhere in the house and let them pay for items (use things from the pantry, toys, and so forth) with real coins. This will help the child understand a basic commerce concept. Tell them that each item costs X coins. You can also use toy cash registers to help them understand how to exchange money for goods.  

Early Lessons on Saving

Use a clear glass jar or transparent piggy bank (a safer option) to show your kids how to save money. Have the child insert the coins or bill and cheer as they do, to create a sense of achievement. 

Show the child how they had a dollar and two-quarters yesterday and how they have a dollar, two quarters, and five dimes today. Appreciate the child’s effort to encourage such behavior. 

Teaching Elementary and Middle Schoolers

This is the phase where you teach kids the basics of investing, earning on their own, and giving. 

Let Them Work for it

Your kids probably get a set allowance, but nobody minds a little side pocket cash. Ask your child to help out around the house in exchange for extra pocket money. For example, they can mow the lawn, take out the trash, tidy up their room or look after a younger sibling. 

This is a great way to teach kids that it takes work to earn money, and that it doesn’t just come from anywhere.

Explain to Them Opportunity Cost

This is a good way of telling your kids why something is better than the other. Explain to the child how they won’t have enough money for that BMX bike if they spend it on that remote-controlled toy car. Compare the two items and tell the child which one is more beneficial and worth spending on. 

Discourage Impulse Shopping

Children are spontaneous, and you never know what they might set their eyes on. If your kid insists on buying an expensive video game, don’t directly say no, but don’t give in either.

Instead, tell your child they can use the extra earned pocket money to pay for it but wait a day or two before purchasing anything worth more than $15. The video game will still be in the store tomorrow. This will give the child time to think about their decision and make a more informed choice next time. 

Let Them Pay

When you go grocery shopping, tell your kids the price tags and read aloud the amount. When you’re ready to pay, skip the credit/debit cards and give your child cash to pay for the goods. 

While you should supervise the child at the cash counter, paying with real money is an exciting task for kids, and they learn from the experience. 

Introduce the Concept of Donation 

Explain to your child how money is not just for buying things but can also be used to help those in need. Pick a charity, non-profit organization, a significant cause, or find someone in need to donate some money. This occasional giving will create a sense of generosity in your child and help them understand their responsibility towards society.  

To Conclude

Teaching children how to spend money wisely, save it, and donate isn’t easy, but the effort is worth it. When kids start learning about the crucial status of money at a young age, they’ll be well aware of how to balance spending, saving, and giving as they grow older. 

While schools focus on academic training to teach about money, what kids learn at home contributes to their life lessons.  

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