I once asked my friends how they feel about teaching their children about money. Almost everyone agrees that it’s important to teach children about money. Almost everyone immediately think of pocket money and paid chores as one of the ways to teach children about money.
I definitely agree with using pocket money and also agree with paid chores. But many parents don't agree to giving their children pocket money and just as many don't agree with paying children to do housework. So if you don’t agree with either pocket money or paid chores, how else can you teach children about money?
In this article, I explain 5 different ways you can teach children about money without resorting to the conventional pocket money and paid chores.
#1: Give your child a money box
The most important gift for a child to begin his or her journey into learning about money is a money box. It is so much more than a place to keep away their money for a rainy day. The money box is a gift of financial freedom in the future that begins with good money habits:
- The money box begins as a present – children love presents (so do adults!)
- It is a special place where they put their treasured money
- Can be used as a tool to teach children about money skills – saving, spending, donating, etc
- Grows with your child – as your child’s financial literacy matures, the money box is a way to introduce more complex concepts about money.
- A natural conversation starter – whenever your child puts money into the money box, it's an opportunity to talk about money.
family, children, money, investments and people concept - close up of father and daughter hands holding euro money coins
#2: Read books about money
When you don’t know where to start, always start with a book.
Every story book has a moral. Books about money are no different. The thing I like best about children’s books is that someone else has put in the time and effort into writing a story about money just for children. The authors have dedicated many years to master the art of engaging children in stories. They have worked out how to explain very difficult concepts in a very simple way. Very difficult money concepts are illustrated simply and beautifully through a story book.
I love reading to children. Younger children are delighted with just about any book we read to them – even ones that we think are boring. They are just glad to cuddle up to mum or dad, to hear our voices and be fascinated by the pictures, colours and words on the pages.
Finding the right book for older children is a bit more difficult, but not impossible. There aren’t a lot of good books about money that engages an older child. One book that comes close to engaging a child that is 10+ years old is One Cent, Two Cent, New Cent, Old Cent by Bonnie Worth. I thought this was an excellent book to teach children about money as a medium of exchange. It also brilliantly explains the history of money in a very entertaining and rhyming way.
Supplement with activity sheets
Beyond reading books, older children also like to have their knowledge challenged. After all, they are beginning to know more than their parents (or so they like to think)! For an older child, one way to teach children about money concepts is by giving them challenging activity sheets to complete. These activity sheets serve 2 purposes:
- challenges the child in his or her existing knowledge about money; and
- introduces new ways of thinking about money.
There are many activity sheets available for free online. Choosing activity sheets with money concepts as its focus (rather than general literacy and numeracy skills) are best. The aim of these activity sheets is first and foremost to teach children about money. Completing these activity sheets will keep older children interested and learning (without them realising that they are learning).
Activity sheets about money is unique. When the children completes maths and literacy activity sheets, they are practising a skill for the day they will be tested. Activity sheets on money, on the other hand, is about building a knowledge base to be applied in the real world eventually. There is no grading system, there is no pass or fail and there are no prizes for being the first person to ‘get it’.
Activity sheets on money simply have one goal: Have I learnt enough to use this knowledge in the real world?
#3: Play board games
What is there not to like about board games?!?!
Okay, maybe for adults playing board games take up a lot of time and we’d prefer to be checking out Facebook or Instagram or Twitter. We’ve all heard it at some point in our lives – social media will always be there, but our kids won’t be young forever. Children will only want to spend time with us for a very short time. By the time our children are teenagers they will prefer to hang out with their friends rather than spend time with us 'old people'.
I have found playing board games to be one of my favourite ways to spend time with the children. It is also a flexible way to teach children about money. If you feel like explaining a particular concept in a bit more detail, you can. If you feel like having a money conversation about a particular concept, you can simply stop the game and have a little chat. But if you don’t feel like explaining anything at all, you can just play and enjoy it as a board game.
Board games do not become popular simply because it’s a mindless exercise. Popular board games remain popular because they were designed with lessons in mind and these lessons are taught through play. Board games with money as its central theme have the added bonus of focusing on teaching children about money concepts in a fun environment.
Teach 'value' through board game
Let me give you a personal example: I have tried many ways to teach children about money and for a very long time, I was trying to teach them the concept of "value". This is a difficult concept to understand because the value of an item can only be discovered through experience, which is not something young children have.
I tried by teaching them what is meant by cheap or expensive. Again I had difficulties teaching them these concepts because the notion of ‘cheap’ and ‘expensive’ depends on the the value of the item. Something is cheap if its price is less than its value. Again, this relies on understanding 'value'. Because we all know that cheap items aren't necessarily items of value. And expensive items aren't necessarily good value either. I managed to solve this difficulty through playing board games with the children.
One of the board games that we played involved making a decision whether to buy something for its cost, which is then sold later for its value when a buyer is found. In the first few rounds, my children didn’t understand why an item could be bought for $350 to then sell it for $500 when they next threw the dice. I had to stop the game at various intervals to point out real life examples to explain to them what is meant by the ‘cost’ of an item and what is the item’s inherent ‘value’. After doing this a few times, they begin to understand that the amount they pay for an item can either be cheap (and therefore of good value), expensive (and therefore not good value) or just right. I thought this was a very effective way to teach children about money, especially difficult concepts such as 'value'.
Board game can be played independently
Another positive point about playing board games is that playing board games is something the children can do for themselves in the longer term. It may take a few rounds of playing the game and explaining the rules to younger children. But once they understand the rules of the game, it is something they can do with each other on an ongoing basis, with minimal involvement (if any) on our part. So we can go back to checking Facebook, Instagram, Twitter.
There is a challenge in finding the right board game for the correct age group. Something that is too difficult will end up in frustration and something that is too easy quickly becomes boring. Before you settle on a board game, it’s important to read the reviews of the game – read both the good and bad reviews (paying special attention to the bad reviews)!
#4: Find teachable moments every day
When we talk about teachable moments, it is easy to get too big too quickly. It might start off as little messages but then we want to make an impact, so we dismiss the little messages and start to look for big messages, big lessons, big ideas we want to talk about. We fall into the trap of thinking that conversations have to be about big lessons otherwise it’s not worth the time or effort. When we only look out for big messages, we often miss the little messages and it is the little conversations that have the biggest effect. Children understand conversations that are natural, free-flow and effortless.
Teachable moments do not have to be about traditional money lessons – such as pocket money, spending wisely, etc. It doesn’t always have to take place at the grocery store or take the form of a lecture. It can simply be a link between the family’s daily actions and money. Just pick anything that you (or your child) do during the day and think of how it affects your bank account balance. Talk to your children about the effect and let them ask questions. You don’t always have to have an answer – sometimes they come up with their own wonderful answers.
Use everyday activities as conversation starters
As adults, we go through our days and do things out of habit. We don’t give any thought to how our daily activities are linked to the world of money. But in fact, everything that we do every day is somehow linked to money. This applies equally to adult's activities as well as children's activities. Children are inherently curious about their world – they are fascinated by how their everyday existence fits into their immediate surroundings. Using everyday activities to teach children about money shows the children how money fits into the world that they live in.
For example, if your child leaves the water running while brushing his or her teeth, you can have a conversation about the cost of using water - the longer it is left running, the higher the water bill. If you are so inclined, you could show your child a copy of the most recent water bill for your household. Another example could be money for the canteen – explain where the canteen money really came from (ie. you working), rather than simply handing it over.
There are many teachable moments for you to discover in any given day. You just need practice in identifying those moments. Look for small messages and you will find them scattered everywhere. Big isn’t always best. Before you know it, you’ve got more conversation topics than you have time for! I now find teachable moments all the time. These are often not big moments but they are moments that have the biggest effect on my children’s understanding about money.
Another bonus for using everyday activities to teach children about money is that as they mature in their understanding, they also understand how they can influence the use of money themselves. This is very empowering!
#5: Speak at their level
We all know that children (especially young children) have a very short attention span. They’re here one minute and the next minute they are off thinking about something else. When speaking with young children, keep in mind they don’t have a sophisticated vocabulary and they certainly don't have an attention span that allows you to explain the meaning of sophisticated words.
Children don’t mind bluntness – in fact, the more bluntly you speak, the better they understand your message. Short and to-the-point messages work best for children. How short and how blunt you make them depends on how old your children are. Older children who have better vocabulary and greater attention span will appreciate a less blunt approach but again, keep your messages simple.
Financial literacy is not a race to the end – it is lifetime learning. There is no rush to get the messages across and there is not a right or wrong way to talk about money. As long as you’re talking, they’re listening (even though it doesn’t appear that way most of the time).
Use practical examples
Children don't understand things at a conceptual level – they need practical, concrete examples. This is a challenge when financial literacy depends so much on understanding money at the conceptual level – the exchange of resources. Using everyday items as examples to teach children about money will help them understand basic concepts about money.
For example, if you know how much electricity your home uses, you could explain it to the children in terms of how much it costs per person per day. The next time your child asks for a lollipop, tell your child how many days that lollipop can power your home for one person. This may not be the most accurate comparison, but remember, speak at their level!
Be consistent with attitudes and beliefs about money
Adults have attitudes and beliefs about money. Children will pick up on such attitudes too. When we teach children about money, we need to remember that we are teaching from our own values and beliefs. Children can sense hypocrisy and will stop listening over time.
It is important that we constantly reflect on our attitudes and beliefs about money. How do we feel about money and how we use money? Is this the way we want our children to think and feel about money? If so, then we teach children about money from a position consistent with our attitudes and beliefs. If we want to change the way our children think and feel about money, then it’s time we change our attitudes and beliefs about money as well.
It is okay to admit to the children that our own attitudes about money aren’t the correct ones to have or the fact that they are not widely held. It’s okay to be honest to the children that we’re trying to learn about money to try and change our attitudes towards money. As children grow up, they appreciate it when they see people bigger and older than them trying to work things out.
Encourage them to ask questions
Children are curious about the world, so expect them to ask you questions. This is a good sign because it means you have an open dialogue in your family about money. It is also confirmation that they are listening to your ramblings about money. But it can also become uncomfortable when they start asking probing personal questions such as:
- How much do you earn?
- Are we rich?
- How much did we pay for our home?
When faced with such questions, it helps if we understand these questions from a child’s perspective. For example, when a young child asks how much we earn, they aren’t interested in the numbers. What they really want to know is whether we can afford food on the table, whether we can afford to buy treats and if so, how often. Similarly, when young children ask if we are rich, they are likely to be wondering why they don’t have some of the items that “all” of their friends have.
Once we realise that children ask these probing questions simply to get an understanding of the world around them and not a personal interrogation of our worth, we become less defensive about it and more willing to explain it at the children’s level of understanding.