By James Yeo
We love our children and the way they are constantly learning something new.
Yet it can be vexing for parents when children keep asking for the latest stuff because they are unable to grasp the concept of money yet.
The solution is to impart to them the values of money, so that they learn the importance of money and not wasting it.
Below, we explore three ways how you can teach your kids the value of money.
1) Incentivised Pocket Money
The first thing children need to know about money is that it does not grow on trees, and that it has to be earned. A good way for children to learn this concept is through what we call ‘incentivised pocket money’.
A good way to introduce pocket money is to draw up a household chores chart.
It does not have to include hard chores, and for younger children could be things as simple as brushing their teeth and making their bed. The main point is to keep it relative to the tasks they complete, otherwise they will learn to expect high amounts of money for very little work.
While people may argue that this method may make children grow up to be money-minded, we feel that the underlying notion is good. It never hurts to have them do chores around the house from a young age so that they can also learn to be independent and learn to appreciate their parents/relatives more.
Another great way to teach children to value money is to have them purchase their own novelty items with a budget.
For example, if you are walking through the shops and your child sees a toy he or she wants to buy, they need to buy it with their own money. This can be pocket money that they have earned, which brings us back to the first point.
If you have not implemented the pocket money system, try doing something differently like asking them to earn it by doing certain things first (like carrying their own school bags, for example).
Once you continue to apply the same principles over and over again, you will instil in them the subconscious concept of choosing between needs and wants. After a few wrong impulse decisions, they will master the art of saving their money for the more important things.
3) Play Monopoly
It may sound a little cliché but playing monopoly with children is a great (and inexpensive) way to help them learn the value of money.
They can learn how to develop passive income through rental income and even negotiate deals to secure their properties, without any use of real money. In addition, Monopoly also gives a way for them to experience real life through the monthly wage (passing Go – $200) and paying of bills (income tax, super tax, etc).
Last but not least, playing monopoly also helps with their counting, organisational and strategy skills, as well as their ability to think critically.
Parents often shun the responsibility to teach children the value of money. However, it can be done in a systematic and realistic manner to make things easier. To add on, kids are wired to continually absorb new information from young so it falls on our shoulders to steer them in the right direction and prepare them for their financial future.
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