What are some ways for kids to learn about money? If you have read any of my previous posts, you might think that the only way to teach children about personal finance is through an allowance. This, of course, is not the case.
Here are three super fun and easy ways that you can help your little ones to learn about money.
My kids and I used to do this all the time. They take their toys, put them on dressers, shelves and tables, and put little price stickers on them. They get the toy cash register out, and together, we play store. To mix it up, sometimes they cook for me. We pretend they are serving me at their restaurant.
Role-playing is a great way to talk about money and get a sense of what your kids understand about the world of commerce. My favourite is the outrageous prices they try to charge. You haven’t seen price gouging until you go to the Little Corbin’s Store of Stuff. It’s a lot of fun, and while you’re being silly, tell them that $1,000 is a tad high for a cup of milk. It is also a great way to spend a rainy afternoon.
Narrate Shopping Trips
Just like you narrate the other activities in your life for young children, do the same with your financial activities. This narration will give your child a good baseline for when you want to start discussing other financial topics. If you start this early, they will be better able to grasp the concept of selling and buying, renting and owning, earning and investing.
This will help you to get into the habit of talking about money with your little ones. When you are running errands with your children, speak to them about what you are doing, starting with the basics. Ask them if they know what it means that you are buying groceries.
Try to walk through the buying cycle with them. A farmer bought land, seeds, and fertilizer. They spent time and effort growing food. Then the farmer sold the food to the grocery store. Now you are buying it from the store.
Explain how you get your money. I think this is so powerful. Let your child know that one of the reasons you go to work is to trade your time, knowledge and skills to your company/clients for money. Explain how that trade works. Do you get paid an hourly wage, a salary, how often do you get paid, do you get paid in cash or deposited into your bank. And my favourite, talk about what you need to pay for with your salary (your food, taxes etc.). I remember the look on my son’s face when I explained income tax to him, and he was indigent “they just take it from us?!?”, Priceless.
Have a Q&A session
I love Q&A sessions with my kids; it gets them engaged in the things that are relevant to them. My kids often ask me what things are free? When I tell them that few things are, they want to know why. To answer I will turn the question back on them and have them take on the role of the business owner, the customer, the landlord, the property developer, the boss, the student, and the farmer. I’ll ask them what those different roles need to trade for money or how they make money?
I’ve also started to ask my eldest about the ads he sees. What are they selling? How are they trying to convince you to buy the product/service? In the long run, this type of Q&A will help them become better consumers, less influenced by advertising (or at least conscious of the effects of advertising).
Let me know in the comments some of the ways you talk about money or have been able to incorporate money lessons for kids into your lives?