6 Important Money Management Lessons for Kids

6 Steps On How To Teach
Money Management Lessons To Your Kids

Learning about money management skills precisely is something every single child needs to be equipped with. They use these skills for their whole lives, so it’s worth taking the time to teach them how to earn, save, budget, and spend responsibly.

Here are the 6 steps to teach money management lessons to your kids from a very young age.

1. Creating the concept of Valuing Money

At the early age, we have started talking about money with our children. Conversations of money, valuing the money is one of the normal discussions that happen at our place. One of the instance which our children demonstrated was:

I was in an exhibition, and my 5 years old kids started crying to buy them a vegan cupcake worth Rs. 250. As a mother, I wanted to buy it for my kids so that they experience everything in life. But as a parenting coach, my thought stopped. I saw this as an opportunity to teach my kids about understanding the value of money. I then asked them politely what is the cost of the cupcake. They said 250. I definitely want to buy you that cupcake. Still, before that, I want you to share all the other things you can get from Rs.250. They started observing, thinking about what they can get from Rs. 250.

“Mummy, I can buy puff, pizza, and new toys with Rs. 250,” said my twin child. “Oh, I can get my toy car, or we can buy Rubiks Cube or even buy a comic book”my other twin child excitedly.
Well, which one do you choose? Cake? Or New Book?

Interestingly, they choose other things when compared to cupcakes. They realized one way of valuing money.

2. Paper Money to Play with

As a young parent, I started giving fake paper currency to play with. When my kids were 4 years old, they played games involving money, like a shopkeeper game. One of my boys would be a toy shop shopkeeper. He used to display all his toys and play as if he were selling them. My other boy and his friends come into the shop and buy different toys. The exchange of currency began then. It also helped them to improve their maths. Because of this, they understood how a transaction takes place. They understood how bargaining takes place in real-time. They understood that the business requires investment. Even they used to write bills. Item name, quantity of the items sold, pricing, totalling. Their mathematical skills have also started improving.

Once the toys were sold, my twin child came to me and asked what to do next? There are no more toys in the shop. He started getting to know about stocks and reserves. It may not be in a technical language, but he tasted it.

3. Board games based on money

Children love games. Especially games with twists and turns. Once they got a taste of doing business with paper money, we now have introduced board games like Monopoly, Business, Life Game, etc. They not only enjoyed playing these games but also started looking at the bigger picture. They now started understanding how money works for them, in real world how the cash flows. Where to invest and where not to invest. They started learning about taking calculated risks. Their mental math has started developing at a faster pace. They now know the value of having a regular and extra income through investing.

4. Savings in Piggy Banks

Now it’s time to introduce some real money. Just like a board game, we started giving money once a month. When we go shopping, I give cash to my children and ask them to do the transaction. I asked the known shopkeeper to give 10 Rs less. My child calculates and says mummy, we got 10 Rs less. Now my children are equipped to figure out and respond to situations calmly. Sometimes we even send our children to go for a shop directly. Independence, talking with shop keepers/strangers all such skills have started improving in our child.

5. How we earn money?

Now that my children have learned about saving money, it’s time to teach them about making money in the real world. One day they asked me to buy an Cricket Kit. This time, I asked them to tell me different ways to get that money. They came up with instant suggestions like let’s make ORIGAMI, Painting, and other crafts and sell it. My children are also fond of making food. They came up with an idea to sell Sandwiches. This has also helped them to build entrepreneurial skills within them.

6. Executing the plan

Now it’s time to execute the plan which they made. They came up with the idea of making sandwiches. They budgeted and planned their finances, and we helped and guided them with the investment. Now they are super excited to execute the plan and see the results soon.

They planned go to door to door, put up a stall in our apartment, stick posters on the notice boards, etc. This will help them in facing the world.

In this whole process, welcoming new ideas and approaching new people has become easy for them now.