I have two daughters – a five-year-old and a six-month-old. As personal finance advocates, my wife and I consciously find teachable moments to our kindergartener for her to learn about money. We don’t always do it right but when we do, we know we are making an investment on her financial future.
Here are 10 ways we teach her about money:
We let her play with coins and bills.
- Currency of exchange is a theoretical concept and physical coins and bills are the concrete representations. So before she can understand the concept, we let her touch and play with coins and paper bills and show how these are used to buy stuff.
We explain to her where money comes from.
- The first time I took her to an ATM machine, she was so amazed that cash just came out by pressing a few buttons – like it was magic! I had to explain in the simplest terms how I make money, and then put the money in the bank, so I could get my money from the bank’s machine.
We ask her to line up and pay for purchases.
- Whether it’s getting ice cream from McDonald’s (okay this is not good parenting) or buying a toy at Toy Kingdom, we make our daughter line up and pay to the cashier. This gives her not only an understanding of commerce but also gives her the confidence and skills in placing orders, giving payments, claiming goods, and counting change.
We bring her to the bank.
- As much as possible, we bring our daughter to the bank when making deposits, paying bills, or withdrawing cash. We usually sit her on the teller’s counter so she can see how things work. It gives her a clear picture what a bank is for and why we go to the bank. Plus, she loves to run around the branch.
We link money with hard work.
- The times we have to be out the whole day or ask for some peace and quiet at home (we sometimes work from home), we explain that we need to work hard so we can earn money. And we use money to buy the things she needs and wants, like her books, food, clothes, and toys.
We let her choose.
- Our daughter knows she cannot buy or spend for anything she wants. She is learning that life is about making choices and that money is finite and therefore she needs to prioritize what is more important. When we’re at the toy store, we give her a budget and she can choose what she wants based on what she can afford. (Actually, more often than not, we just let her play and she rarely nags us to buy something.)
We make her wait.
- I am little guilty of acquiescing to my daughter’s requests but her mom does a better job of teaching delayed gratification. So when she wants something at the grocery or sees something from a commercial that she wants to buy, we tell her to wait. Kids being whimsical, they often forget they want something.
We give rewards – and gifts.
- Sometimes we give our daughter a toy or ice cream to reward a particularly and exemplary good behaviour (otherwise most of her good behaviour is expected, not paid for) or an accomplishment. And sometimes we just give a gift or pasalubong without preconditions but just out of affection. So she knows that when she does something more than what is expected of her, she can get rewarded, and that sometimes she gets something just because we love her as our daughter.
We look for free alternatives.
- The good things in life are often free (or cheap). So she knows she can have as much fun playing with cardboard boxes and home-made kites as with fancy electronic toys. Even with iPad games, she knows she can download only free books and games, which she enjoys already. But she also knows that if it’s worth paying for, we are willing to buy it.
We teach her to have a gratitude attitude.
- When she complains about her food or whines about being bored, we tell her to be thankful with what she has (and pull a guilt trip about street kids and starving children in Africa – who knew we’d say the same things as our own parents?). We also model gratitude by praying together as a family and thanking God for all His blessings (we enumerate them so she knows every good thing is from the Lord).
Hope you learn other tips about teaching your kids about money from the pages of this issue!