- 22 Oct, 2024
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Activities that teach kids about money
Financial literacy should be considered a life skill and therefore form part of the things children learn early in life. A skill that many people including myself benefitted from in my upbringing and can testify has positively impacted my life and choices as I have grown into adulthood. I talk more about this in the article about my financial literacy journey.
Research in 2013 by the Money Advice Service (now called MoneyHelper) on habit formation and learning in young children, shows that children have a good grasp of money concepts by 7yrs old. This therefore suggests that understanding how to earn, save, spend, and invest early is crucial in laying the foundation for financial independence and responsibility as children grow into adulthood.
“By five to six years of age, children understand that some denominations do not carry enough value to buy some items. It is not until children approach seven years of age that they begin to understand money can be exchanged for goods and that ‘change’ is returned by the shopkeeper only when denominations larger than the cost of the item are offered by the purchaser (Berti and Bombi, 1988). Further abilities to ‘represent’ are required to understand that “money” and goods can be exchanged through credit cards and cheques, which are not themselves the “money” behind the exchange but ‘represent’ value. However, it is probably not until after the age of seven that children begin to understand that exchanges involve a set of unseen transactions among other parties (de Clercq, 2009)
Page 18. – https://webarchive.nationalarchives.gov.uk/ukgwa/20230827065101mp_/https://maps.org.uk/wp-content/uploads/2021/03/the-money-advice-service-habit-formation-and-learning-in-young-children-may-2013.pdf
Here are 5 ways that you can teach kids about money while keeping them engaged and entertained.
- Role play with real or fake money: Children love role-playing, and setting up a pretend shop is a great way to introduce them to the concept of buying, selling, and budgeting. Buy fake notes which can be used to role play or practice when you go out. This helps them count money, calculate totals, and make decisions about what they can afford. This activity teaches them the basics of currency, math skills, and making choices within a budget.
- Play games with financial themes: There are several board games that are designed to teach kids about money management. Games like Monopoly or The Game of Life introduce concepts like earning money, paying rent, budgeting, and even managing unexpected expenses. Playing these games as a family allows kids to learn about money in a competitive and fun environment.
- Introduce allowances: While some find the concept of associating chore charts with an allowance wrong or even controversial, there are only a few other ways to introduce the concept of earning through effort and hard work at a young age. Allowances that are tied to work helps children appreciate the value of work and gives them hands-on experience in making financial decisions
- Set up a family budget together: Once your child is a little older, involve them in creating a simple family budget. You can show them how to balance income and expenses, and how to allocate money to essentials like food, housing, and savings. Allowing children to help with grocery shopping or deciding on budget-friendly activities can give them a sense of ownership and responsibility in managing family finances
- Encourage Giving: It is essential to teach children that money can also be used to help others. Encourage your child to donate a portion of their allowance to a cause they care about. This helps instil values of generosity, social responsibility, and empathy. Setting aside “give,” “save,” and “spend” jars can help them balance their financial habits as they grow into financially literate adults.
Bonus Point: Use a piggy bank to introduce savings for younger children and a bank account for older children. This is a good way to introduce them to financial discipline, delayed gratification and understanding the banking system. There are now lots of banks in the U.K that offer children’s bank accounts. NatWest First Saver, Starling Bank Kite, Santander 123 Mini, Yorkshire Building Society are examples.
Stay healthy and Wealthy,
Written by: Anjie Enabor, FCCA
Reviewed by: WordsMaestro