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6 Techniques to Educate Your Small Children About Money
Children can benefit from finance education at an early age. A study from the University of Cambridge, “Habit Formation and Learning in Young Children,” found that money habits are formed by age seven. Researchers share it’s important to start basic finance education by age 3.
Children pick up money habits quickly, so giving them the right direction from early childhood is crucial .
1. Start with basic currency literacy. A study from Yale University found that children can recognize and remember coins by the age of 3!
· Educate your children about the different coins and dollar notes.
· Consider teaching them about foreign currencies during holidays. This will expand their minds and help them learn more about the countries you’re visiting too.
2. Create money jars. Money jars are a fun and easy way to educate your child.
· You can create three types of money jars. Until they are around 12, children learn better from a physical rather than abstract lesson. They can see and touch jars for spending, saving and giving, which cover the basic lessons of understanding how to use money. Children understand what they can see and touch so while a spreadsheet or online bank accounts may be convenient for you, they don't necessarily help your child really understand the effort involved in saving, spending and managing money.
3. Teach your children how to use the three jars and why they’re important.
4. Use the jars to separate money after birthday gifts or pocket money payments. Children will learn how to save for the future.
5. Use the giving jar for charities. Children will learn about giving and understand how they can help others with their money. They can donate the money to local animal shelters or food pantries even a charity you already support.
6. Set a money goal. Children can set a money goal to purchase a favourite game or other item.
· Money goals are an easy way to teach children financial patience. They also provide a lesson on how to save money.
· It’s important to set realistic goals, so children will be motivated to stay on a savings plan. If the toy they want is expensive, it can take a while to reach their goals. Will they stay interested? Picking smaller and less expensive targets is better.
7. Go shopping. Let your children use their spending jars at the shops to make purchases.
· Shopping provides an easy lesson setting. How will your children spend their money? Will they use their entire jar at one shop or spread it out over many shopping trips?
· An outing to the local toy shop also gives you the chance to discuss comparison shopping. Point out different prices on similar items and teach your children about finding inexpensive options.
· Evaluating the results of the shopping trip will help them understand their choices. How will they restock their spending jars?
8. Use garage sales. Garage sales offer another way to educate children about finances.
· Garage sales can help you clean out your children’s rooms and teach them about money at the same time.
· Ask your children if they want to participate in the garage sale by selling their old toys or clothes. Help them select items they no longer use and find appropriate prices for them. They can use the experience to refill their money jars.
· Older children can help sell items at the sale. They can keep track of change and watch customers. This is also a valuable opportunity to learn about price negotiations with customers.
Finance education can begin before your children are in school. It’s important for them to understand basic money rules and form the right habits and there is no better teacher for this than you, their parent.
What your children learn by your example will stick with them forever so aim to be the best possible money teacher you can be to your children – you won’t regret it.
Children pick up money habits quickly, so giving them the right direction from early childhood is crucial .
1. Start with basic currency literacy. A study from Yale University found that children can recognize and remember coins by the age of 3!
· Educate your children about the different coins and dollar notes.
· Consider teaching them about foreign currencies during holidays. This will expand their minds and help them learn more about the countries you’re visiting too.
2. Create money jars. Money jars are a fun and easy way to educate your child.
· You can create three types of money jars. Until they are around 12, children learn better from a physical rather than abstract lesson. They can see and touch jars for spending, saving and giving, which cover the basic lessons of understanding how to use money. Children understand what they can see and touch so while a spreadsheet or online bank accounts may be convenient for you, they don't necessarily help your child really understand the effort involved in saving, spending and managing money.
3. Teach your children how to use the three jars and why they’re important.
4. Use the jars to separate money after birthday gifts or pocket money payments. Children will learn how to save for the future.
5. Use the giving jar for charities. Children will learn about giving and understand how they can help others with their money. They can donate the money to local animal shelters or food pantries even a charity you already support.
6. Set a money goal. Children can set a money goal to purchase a favourite game or other item.
· Money goals are an easy way to teach children financial patience. They also provide a lesson on how to save money.
· It’s important to set realistic goals, so children will be motivated to stay on a savings plan. If the toy they want is expensive, it can take a while to reach their goals. Will they stay interested? Picking smaller and less expensive targets is better.
7. Go shopping. Let your children use their spending jars at the shops to make purchases.
· Shopping provides an easy lesson setting. How will your children spend their money? Will they use their entire jar at one shop or spread it out over many shopping trips?
· An outing to the local toy shop also gives you the chance to discuss comparison shopping. Point out different prices on similar items and teach your children about finding inexpensive options.
· Evaluating the results of the shopping trip will help them understand their choices. How will they restock their spending jars?
8. Use garage sales. Garage sales offer another way to educate children about finances.
· Garage sales can help you clean out your children’s rooms and teach them about money at the same time.
· Ask your children if they want to participate in the garage sale by selling their old toys or clothes. Help them select items they no longer use and find appropriate prices for them. They can use the experience to refill their money jars.
· Older children can help sell items at the sale. They can keep track of change and watch customers. This is also a valuable opportunity to learn about price negotiations with customers.
Finance education can begin before your children are in school. It’s important for them to understand basic money rules and form the right habits and there is no better teacher for this than you, their parent.
What your children learn by your example will stick with them forever so aim to be the best possible money teacher you can be to your children – you won’t regret it.