What exactly do your kids need to know about money?
Oh, to be young and innocent, seeing the world in black and white. Money comes from the printer in daddy’s office, and food comes from mummy’s fridge. In a way, teaching your kids about the reality of money equals ruining a part of their innocence. Cruel, eh?
Well, cruel is letting your beloved kids go out to the wild world without proper knowledge. So, how do you teach them about money without ruining their childhood? What do they need to know and what will be too confusing for them? Read on to find out the money concepts you would want to teach your kids.
Where does money come from?
Younger kids may think their parents can print money whenever they want. So, teach them that money is gained by doing something. Have them do small chores, like mowing the lawn or washing the dog, and reward them with a little extra allowance money. One thing to remember is to draw the line between rewarding them and teaching them that not everything they do gives them money.
Once they get the gist of how to get money, introduce them to their first piggybank. They need to learn to set some money aside for a rainy day. This helps them learn both about savings and budgeting.
Why do you give your money to the bank?
Bring your kids along next time you go to the bank. Teach them that saving money in bank is not only safer than home, but also more profitable. Tell your kids that the bank gives you interests and your money can grow overtime, but you can still withdraw it when you need it using your debit card.
Why do you borrow money?
This may be a little more confusing for kids. When you use your credit card, tell them you’re borrowing money from bank and you will repay it when the bank asks for it. Your kids may still wonder why you need to borrow from bank, so tell them something like this:
When you need a house and don’t have enough money for it, it’s okay to borrow money. Because if you don’t, then you won’t have a house to live in, right? As long as you can always repay the bills on time, then it is okay to take loans.
How do I get more money?
It’s time to teach the little ones about investments. Find easy things they can do that will teach them the concept of investing, like gardening. Have your kids buy tomato seeds and help them plant in the backyard. After a few weeks of nurturing the plant, help them harvest the red, juicy tomatoes – which can be either made into money or gifted to mum to cook dinner!
It is never too early to teach your kids about money. Remember to keep the lessons fun, memorable and easy to understand. Hopefully, this will help them grow to be responsible adults.