As parents, we want our children to grow into independent and successful adults, and a big part of adulthood is money management. When children don’t learn to value money and they have no inkling of the importance of saving, it’s going to be a tough road for them when they grow up. After all, money-related decisions can determine the kind of lifestyle our children get to live.
When is a good time to teach our children about money? Some parents believe that introducing money concepts to young children can cause confusion and unnecessary stress. Some parents prefer to wait as long as possible to talk to their children about money.
While we don’t want to put the weight of the world on the shoulders of our little ones just yet, we can start by teaching them simple lessons on money management when they’re young. Research shows that young children benefit from learning about how money works, and lessons should begin at around 5 or 6 years old because money habits and attitudes are already formed by the age of 7.
When it comes to introducing and teaching young children about money, remember to keep things simple. Introduce them to coins and cash. Explain what money is and how it is used. Show them how money works by letting them see you making purchases with cash.
Children need tangible ways to understand abstract concepts, so it’s crucial to give them ways to practise what they learn, such as using familiar daily routines and using real money. Remember, by starting early, you are building the strongest possible foundation for their financial lives ahead.
Here are 4 key concepts that we encourage parents to teach their little ones:
- Money doesn’t grow on trees.
It is important that your children know that they can only spend what they have. This instils the values that they need to live within their means when they grow older. Take them grocery-shopping and let them figure out what they can purchase with $5.
- The difference between wants and needs.
For preschoolers, 95% of the things they ask for are wants, not needs. This doesn’t mean they should never get the things that they ask for, but it does mean we have to start helping them with correct word choices. “Wants” are things like toys and treats that they would like but can live without, and “needs” are things like healthy food, school supplies or sleep. Take your child to the supermarket and talk about how you decide what to buy and what to pass up.
- Some things are worth the wait.
A popular Stanford study showed that the better a child was at delaying gratification for a stronger payout later, the more successful he or she would be as an adult. By starting early, you can drastically improve a child’s ability to wait for what they want. This skill holds significant importance in making sure your children know how to live within their means, avoid bad debt, and save for the future as adults. Leading by example, you can show your child how to save up to buy something that you really want.
- A habit of saving.
It is important to teach our kids that money isn’t just for spending. They should be saving money regularly as well. Saving teaches discipline and delayed gratification. Saving encourages goal-setting and planning. Saving builds security and independence. You can consider giving your kids certain chores to do to earn a small money reward or allowance. Help them get in the habit of saving with a piggy bank or savings jar where they can deposit the coins or cash, to save for short-term goals, such as a toy or snack treat.
While those are good concepts to learn at home, in GUG Preschool, we do teach our K1 & K2 children about money management. We know that preschoolers learn number concepts best by manipulating and counting real objects, before progressing to counting coins and cash.
As part of our curriculum, we bring our children to nearby shops or supermarkets to teach them how to buy things with real money so that they can benefit greatly from experiential learning. This not only teaches them about numbers and the value of money, but also self-control and responsibility.
Teaching children about money is not an easy subject, but if we put in the effort and continuously communicate a clear message about good spending and saving habits, it will set our little ones on the right foot for a lifetime of good financial decisions.