It’s important to talk about the value of money with our kids as early as possible. Although some may think it is a taboo subject, we beg to differ. Setting the tone of how we view and appreciate every ringgit and sen starts at home, and sets the pace to which they view and appreciate money.
Here are some practical tips to teach kids – both young and old – about the value of money.
Toddlers need to be taught creatively because their grasp of concepts is still in its infancy. Here are some DIY tricks you can do:
- Glue coins to magnets and place them on the fridge or a whiteboard. Show your toddler how many 5 sen coins makes a 20 sen coin, for example.
- Start talking about how people make money. As you venture out, point out different professions. For example, the hawker stall owner, the teacher, the bus driver. Teach them the concept of working professionals and a monthly salary.
- If you bring your kids to the market for grocery shopping, show them how you bargain or negotiate. If it’s a franchise supermarket, show them how each item is priced differently and teach them about the value of fresh produce.
- Show them discount codes or coupons and explain how this helps you save money when you use them.
- Create multiple money jars at home – saving, groceries, investing, donating – and get their help to put money into these jars. This teaches them that there are multiple uses of money, and it isn’t just to be spent. You’re also teaching them the basics of budgeting.
- If they want a toy that’s a little expensive, create a savings goal and help them achieve the target. You can do this with a piggy bank too, and explain the process to them. Placing savings in a jar on a daily basis will help their money grow until they can afford to buy the big-ticket item. Also, by teaching them delayed gratification, they may think twice before blowing all their savings on a toy they don’t really want.
- Teach them about the limited supply of money. A great way to do that is getting them to make a choice. For instance, a trip to the ball pit or a movie? They can’t have both because there is only so much money to spend. Helping them assess their wants in relation to finances is exactly the lesson you want them to learn.
- Set up a bank account which gives them a sense of accountability and pride. Teach them the basics such as, keeping track of their money, making simple payments and also depositing money for savings.
- If you trust your children enough, sign them up for a supplementary credit card. Though this takes strict governance and monitoring. You’ll need to have a handle on their monthly statements and also sit down with them to discuss their spending patterns if it starts to go out of hand. But seeing that a lot of youths don’t know how to manage their credit card debt, this could be a great training ground to help equip them with the right skills before they sign up for their own card. Teach them about the concept of borrowed money and that it isn’t “free money” to spend. You could even give them a monthly limit to spend and see if they can adhere to that. It’s just as important to teach them financial management using cards because we’re heading towards a cashless society and also it is important to still track spending when you aren’t using cash. And a lot more difficult to control spending.
- Get them to earn money through household chores that they can help with. This teaches them the concept of reward for hard work.
- If your kids are gamers, you might want to teach them the value of money and how purchasing “coins” online actually depletes their savings accounts, you could link their supplementary card to their online ID and give them a monthly allowance, to ensure they don’t overspend.
- Encourage them to think about reusing or selling their old toys. The money they earn from the proceeds of sales can go towards their savings account or to the purchase of a new toy.
- This might be a good time to introduce how foreign exchange currency works and how every Ringgit does not equal to the same value in another country. This might make them appreciate the costs of overseas travel a lot better also.
- Give them an allowance as well to help them make their own decisions for monthly expenses, for example, their prepaid mobile/internet spend, clothes, transport, food, school supplies, movies, etc.
For more tips on financial literacy advice, head over to the CompareHero.my blog where we also talk about credit cards, personal loan, and broadband.