Money and Young Kids

The dilemma of whether or not to explain to kids about money, bills and finances grows as the kids develop and have more requests and greater needs.
Just like many other life skills that we find necessary in adulthood, money management is also neglected while lots of energy is wasted on high levels of math.
Are you ready to make sure it is your kid?

Handling money is something we all need long before we leave home.
So if you wonder when it is the right time to learn about money, my answer is: the minute your kid can count to 10.
It is, after all, your way of getting the things you want in life.
Tell them about how people used to trade with their neighbours: "I will give you apples and you will give me carrots".
This evolved when they came to the market to trade for the things they wanted.
Explain to your young kid that money was a great thing that happened to us because we can buy whatever we want and not just what our neighbours grow.
Stick to at least once a week, because young kids' perception of time is not fully developed and 7 days seems to them like a very long time.
Others think that it is a good way to teach kids that money does not just fall from the sky and that we need to work for it.


Whatever you choose, stick to your schedule and always, always hold a ceremony of giving your kids their money.
You can always reward them for things they do for themselves.

Being nice to a sibling, doing their homework without being told, taking a shower by themselves, waiting patiently when mum or dad are on the phone.


Pocket money rules

When you choose to give pocket money as a reward, remember that the rules must be understood by everyone involved.
If your child can read, make a list of the chores (and/or emotional stretches) with their matching reward amount.
Having an understanding will prevent bargaining and allow both parents to handle the situation in the same way.
Think about this before you start teaching your kid about money.
Whatever you decide is good, as long as you have a good explanation for yourself and you stick to it.
Any piggy bank that does not allow the kids to take the money out is a cruel thing for your kid.
Money is not there to keep.


Less is sometimes more

Young kids find it hard to understand that a $1 coin is worth more than 20 coins of 5 cents each.
Therefore, always use the smallest coins to give them money, to give them the feeling they have plenty of money.
When they do understand this, start exchanging single cents for 10 cents, 10 cents for 25 or 50 cents and 50 cents for dollars, etc.
When a young kid takes a wallet with them for shopping, this is the greatest lesson about money management.
Always show them the options, "This costs this many coins, the other thing you want costs that many coins", and teach them to choose.


Loans

If you go with your kid somewhere and they did not bring their wallet, use the opportunity to teach them about lending and let them borrow some money until you get home.
If they have their wallet with them, but not enough money and they ask for a loan, make sure they understand what this means.
Just like in real life, teach them that things that require loans also require more time to think about.


Savings

The first time your young kids ask you for a loan, be happy, because now you can teach them about savings.
Teach them to always put 10% of their money aside.
This is the money you keep for something big or special that you want later.
Saving is a good lesson in waiting, something that is hard for young kids, because their perception of time is not fully formed.
Having a healthy attitude towards money is important to help your kid grow with skills that school is not going to give them.
If you think they are too young to know about money, remember that one day they will have to pay for your nursing home.