5 Ways To Teach Smart Money Skills To Kids

Have you ever heard a mother say to her child, “You don’t know how hard it is to make money so you can waste it” ? Perhaps you have said something similar yourself? It is indeed a common complaint, but it is also true that children do not understand it because they have not yet had the chance to do so. That’s why it’s so important to teach kids smart money skills from the time they are very young.

We cannot judge children, especially when they are very young, because they do not yet understand concepts such as money, budgeting and salaries. Financial education is usually reserved for adults.

But let’s do an exercise in empathy. Let’s try to put ourselves in the shoes of that four- or five-year-old kid who wants to discover anything and everything that grabs their attention.

In addition, that child has always had food whenever it wanted, toys, clothes, a house and certain other things . Can we judge them for wanting this new board game or that new doll? No, because they haven’t had a chance to understand how money works in the world they live in.

Why is it important to teach money skills to children?

One of the great experts in the field of financial education is Javier Calvente, entrepreneur and expert in the digital world and household finance. That is why we think his opinion in this area is important.

According to Calvente, the importance of financial education in children is critical as they discover as they develop that they have to face new challenges for which they must be prepared.

Undoubtedly, one of the biggest challenges parents face is knowing how to manage finances. After all, their family’s present and future well-being depends on it. But not only that, the example they set and the lessons they learn will help their little ones understand the monetary value of food, health and even how to manage their free time.

Strategies for Teaching Children to Be Wise with Money

That said, let’s take a look at some strategies and tips we can give you to teach kids smart money. In this way they learn to use money wisely, because they know the concept well.

Lead by example to teach children money skills

Remember that children learn a lot from their parents. Therefore, if they see you at a young age that you are responsible and budget your finances wisely, they will also see the intelligent use of money as the norm.

Talk to your little one so they know why you can buy certain things, but maybe not certain other things because they are too expensive or unnecessary. Explain the need to save, show examples of right and wrong, and don’t be afraid to explain why you make certain financial decisions.

Get your kids involved

It is also a good idea to involve children in family finances from an early age. The point is not that they manage accounts, but that they know what the various budget entries are used for. For example for food, clothes, books, etc.

This way you can involve your little ones in the family shopping. For example, if you are at the grocery store, you can allocate them a small budget to buy what they want. That way, they have to adjust their choices according to the limited amount of money you give them.

Set up an allowance to teach kids money skills

Many adults, as well as some children, have a misunderstanding of the concept of benefit. After all, if they need something, parents provide that need. So why add a surcharge? It is easy to introduce children to the concept of saving.

Children receive a weekly or monthly allowance for their private use. However, they will have to use it as they see fit without exceeding the limit. They understand concepts such as savings, administration, etc.

New technology

Games and new technologies will also help children learn strategies for saving and using finances. There are many elements, from YouTube channels that specialize in this topic, to mobile applications that allow them to learn while having fun.

Teach money skills to kids through the stages of finance

You can determine the stages of finances based on usage, but also based on how you can obtain money. In other words, a first stage would be the way to earn it. Then comes the saving phase. Finally, the spending or investment phase. All this creates a story similar to that of the financial pyramid adapted to the youngest members of the family.

We hope these five ways to teach children how to use money wisely will help you help your children understand the value of money, its importance and the need to handle it correctly.