My 4 year daughter demanded to buy her favourite princess doll in a toys shop. When I refused saying I don’t have money she shown me atm machine and asked to get money from it. I tried to explain her that for getting money from that machine we have to deposit money in bank but she shown me queue of people standing in front of ATM and said” if this many people can get money from the machine then why can’t you ? “. I was helpless mother trying to explain my child about banks, atm, for 1 hour on the road but in vein. She insisted by throwing tantrums and finally I have to buy the princess doll for her. My little kid thinks that ATM machine is machine which has money and it gives it to whoever goes to it. And that’s when I started money lessons /education to her.
I used some step by step ways to explain money and its importance. Initially I found it difficult, as from where to start and how to teach her. As money comes with so many things savings, banks, loans, hard work, own money, from where it comes and where it goes. There might be number of questions from your little one. But it’s not that difficult as it sounds as children are very smart and they learn very fast. If they get money lessons by using it in day-to-day life they will understand about it. And this money education will be perfect start of their mathematics base lessons automatically. Managing money is very essential and if children learn it from young age the will use it wisely once they grow up.
# 1.Educate about money
Start from money counting lessons first. Give some coins and then notes for counting .Children will not only learn counting but values of coins and notes from it. And then explain how money is used to buy things and from where money comes? How money can be earned and then spent.
Tell them how things can be bought before 10 years with same money and how many things can be bought now with same money. Include money saving, managing and borrowing money lessons in it slowly. With growing age elaborate more topics about money. For older children ask to keep track of their daily spending. Make a note book and note down all their expenses in it to know how money gets spend .By knowing own expenditure child will try to save money.
# 2. Money saving habit
From young age develop a habit of saving money by giving a piggy bank. Give coins for depositing in piggy bank. And use that saved money for buying things like note books, colours for children. Piggy bank is smaller version of bank .By using piggy banks children will learn to save money. Take them to buy things when they are on discounts /sale. Explain children importance of sales in malls and how shopping only in sales/discounts can help to get more stuff using same amount of money. These practices will make your children financially smarter.
# 3. Visit bank along with children
Take your child along with you to the bank and perform all transactions in front of him/ her. Explain about banks and how money is saved, borrowed, withdrawn from it. Also valuables like gold can be kept safe in this place.If possible open minors account for children older than 7 years and let them learn deposit and withdrawal of money in it. By doing transactions on own children will learn managing money from young age.Banks are best place to start money lessons for your children.
# 4. Involve children in family insurance planning
No I ‘m not asking to teach rocket science to your child but it’s just insurance policies and believe me it’ now that hard and weird as it sounds. But it’s quite easy and once children know about it they will remind you to pay your next premium without fail. Explicate your child about insurance policies and how important it is to have these policies for secure future. What is insurance and how to have one. How money helps to live life and insurance is its different form. Children will know about saving money ,insurance and it’s significance by this lesson.
# 5.Earn own money
Ask children to earn own money. It’s been said people value hard earned own money. For that arrange events like Food stalls ( anand nagari), on the occasions of celebrations ,festivals in your society .Set small food stall for your child and ask to sale them. You can give helping hand by cooking food or making handmade greeting cards, paintings, hand made toys to sale in these stalls. In this way children will learn to earn their own money and importance of hard work. Children will value hard earned money from these events and they will learn to spend it wisely if they are properly educated about using it from young age.
# 6.Shopping of grocery, books
Ask children to do shopping on their own. You may accompany them to super market, but let them do everything on their own. Hand over list of things to buy and required money. Ask them to select these things from super market/ shop and weigh them,.Also ask to do exact payment for the bill .Show them how to bargain at local vendors shops to get good deals. It will help them to calculate money and do transactions using it.
# 7.Money games
There are many types of money games available in the market. These money games are interesting ways to start building financial habits for children.Involve children in playing these money games. They will know how to buy and sell things, How to do transactions using money. Let children play traditional games also like business boards and learn business while having fun.
These money lessons will be helpful for inculcating future financial habits in children.If you have any ideas to add in the above list , please mention it in comment section.