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Teaching Young Children about using Money

Updated on November 3, 2012

Children watch their parents use and handle money every day. They observe thousands of television commercials each year. Investing in the life-long benefit of teaching good money habits is not only desirable, but also makes it well the effort. For children who are taught fiscal skills at grade-school age understand the concept of earning, saving, spending, borrowing or sharing early on. Moreover, as they grow older, they can begin to make some decisions about money, such as deciding how to spend their pocket money on a vacation or how to save up enough allowance for an expensive purchase. Here are some smart tips on teaching children healthy money habits –

Set up a Family Piggy Account

Young children are fascinated about collecting coins. You can teach them the basics by setting up an attractive piggy box and labelling it according to the next fun activity decided for the family; for instance ‘Money Bunny Fun’ or ‘Mc Donald’s meal’. Every day, you can place leftover change into the box, and if, your child gets an allowance, encourage her to contribute a portion of it in the piggy bank, too. This exercise will help demonstrate how a family can work together and save for something fun.

Play Games of Monopoly and Life

We all have come across board games such as Monopoly and Life which can be a fun way to teach kids the basics of finance and investing. Gather your family members around this all-time favourite to teach children about investing money, act as a banker, rent payments or find bonuses.

Play Online Money Games

Some children learn more quickly through online games. Scout the web in search of some simple online games, such as, Money Games where children can learn about money through coin recognition, adding up, counting and working out change games. Some websites also offer games for older kids, as well as tips for parents about aspects of personal finance.

Pay them an Allowance

Parents can establish a set allowance for their children and stick to it. Do not cave in if your child has blown all his allowance on candy treats in the first few days. Learning that there is a limit to what they can purchase is an invaluable lesson for children. Another good way is to tie chores to an allowance and permit kids to do more chores around the house.

Talk about Money

Involve kids with talks about how the family is planning to buy a new TV or car, or how they need to budget expenditures they can control such as clothing, movies, gifts and supplies. You can also talk to your kids about their allowance, on how much they’re saving and what for whether it’s a new iPod or a music record. As they grow older, household finances can be kept transparent.

Create a Swapsie

When your kids are tired with old books or with certain toys, you can encourage them to swap it with their friends’ toys. This way they learn how to exchange but you don’t actually have to purchase them.

Teach them Generosity

No lesson about money is complete without a talk about generosity, charity and gratitude. Help your child put money in perspective of the many other things in life -- outside of fun or presents. Every season you can help your child spend some time bagging up their closets with items that are too small or unused. Then drive them to drop off at a charity centre or allow them to donate it to poor children living in slums. Just sharing and loving are invaluable lessons that teach generosity for our fellow mankind.


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