Teaching Your Young Children About Money
Introducing financial concepts to young children is essential in ensuring they develop good money habits that will benefit them throughout their lives. This guide provides parents with practical tips and activities to make learning about money engaging and effective.
Their Foundation
- Significance of Early Financial Education
Teaching children about money from a young age is crucial. It lays the foundation for a secure future, fostering financial responsibility, discipline, and the ability to avoid common financial pitfalls.
- Long-Term Benefits of Early Financial Habits
Early financial education fosters responsibility, decision-making, and delayed gratification, leading to better money management. It builds confidence and self-reliance, equipping children with essential skills for lifelong financial security.
- Explaining Money Through Play
Simple ways to introduce money include using play money and engaging in shopping games. These activities make abstract concepts more tangible and understandable for young minds. For example, you can set up a pretend store at home where your child can use play money to “buy” items.
- Age-Appropriate Activities
For younger children, activities like counting coins and sorting them by denomination can be fun and educational. As they grow older, you can introduce them to the concept of earning money through chores and small tasks. This helps them understand the connection between work and earning.
Their Future
Importance of Saving and Goal Setting
Teaching children the importance of saving money is crucial. Setting savings goals, even small ones, can help children understand delayed gratification and the benefits of putting money aside for future needs.
Using tools like piggy banks or savings jars can make saving fun and visual. Encourage your child to set aside a portion of any money they receive, whether it’s from an allowance or gifts. You can also introduce the idea of saving for specific goals, such as a new toy or a special outing.
- Promoting Everyday Financial Responsibility
Incorporate everyday habits that promote financial responsibility. Assigning chores in exchange for an allowance can teach children the value of earning money. Use real-life situations, like grocery shopping, to discuss making choices and understanding the difference between needs and wants.
- Encouraging Mindful Spending
Teach children to think critically about their spending. Encourage them to ask themselves whether they truly need something before making a purchase. This habit of distinguishing between needs and wants can help them develop mindful spending habits.
Practical Examples and Tips
- Use Clear Jars for Saving: Instead of a traditional piggy bank, use clear jars so children can see their money grow. Have separate jars for saving, spending, and sharing to teach different aspects of money management.
- Match Their Savings: Offer to match the amount they save. For example, if they save R5.00, add another R5.00. This reinforces the benefits of saving and introduces the concept of compound interest simply.
- Introduce Budgeting: When giving an allowance, explain what expenses they will need to cover. This could be small purchases like snacks or toys, teaching them to budget for the things they want.
- Hands-On Learning: Use everyday situations to teach money concepts. Have them help you count out money for a parking meter or calculate a tip at a restaurant. These activities make money management a part of their daily life.
- Read Money-Themed Stories: Books can be a great way to introduce financial concepts. Stories can make learning about money fun and relatable. (*See more about three outstanding books by South African authors)
- Start a Savings Account: For older children, opening a savings account can be a significant step. It teaches them about banking and the importance of saving for bigger goals.
*Books on money for children by South African authors:
Mrs Spiggles and Her Money Tales by Jean Archary
Mrs Spiggles is a flying piggy bank that visits the children in Forever Town and teaches essential money messages. Help your children understand how earning and saving money before spending is the right thing to do.
Jean Archary is a specialist in the financial services field, a Certified Financial Planning Professionalยฎ and a certified workplace coach.
My 3 Piggies – Nala and Save, Invest and Share Piggy Banks by Gugu Sidaki
This is a wonderful place where you will learn many new ways on how money works. Gugu Sidaki is an experienced Wealth Manager with a passion for financial literacy education and empowering individuals to achieve their financial goals.
Coco The Money Bunny by Nicolette Mashile
Join Coco, the money bunny, on her journey to learn about what money is and the best ways to make her money work with her. Nicolette Mashile is the founder of Financial Fitness Bunnies – a Consumer Financial Education Content agency.
By teaching your children about money from an early age, you’re setting them up for a lifetime of financial success. These early lessons will help them grow into financially responsible adults who understand the value of money and the importance of saving and spending wisely.
About the Author:
Charmel Flemming, CA(SA), is a mother of two girls, ages 8 and 10, a chartered accountant, and the
founder and CEO of F Twelve, a cloud-based accounting and management solutions firm. She is also a Non-Executive Director on several boards. Known for her integrity, big-picture thinking, and entrepreneurial spirit, Charmel leverages her extensive corporate experience to drive innovation and progress, with a strong passion for supporting local businesses. She enjoys teaching her children the value of money and fostering healthy money habits, encouraging them to develop their own relationships with finances.ย
