Being the super multitasker mummies that we are, we wear many different hats to teach our children multiple topics and life hacks. We teach them everything from art to spelling to math to money management and a whole lot more.
Teaching children about money is something that starts from home and with us. Fortunately, we are never short of easily available resources that we can use to teach children about money.
However, I’ve found that not all ideas will work for everyone, because every family has its own sets of principles and values about money. Having said that, most of these ideas will work better given our personal touch and tweaks that are aligned to our family values.
I’ll share some of my stories and experiences about ideas that worked and those that didn’t. Perhaps you may benefit from learning from my mistakes and make it work better with your children.
Teaching Children About Earning Money
One of the common ideas about teaching children on earning money is to let them earn our money. The idea is to “hire” our kids to provide a service at home and they get paid for it.
We do this by paying them to do household chores like sweeping the floor, wiping and dusting around the house, help with laundry, etc.
After deciding on the payment rates, my son began his first job at home. All went well and good. I can finally tick my checklist off on the topic of teaching him how money is earned through labour.
My Lesson Learned…
Then came one fine day, when I was putting my feet up and was lazy to get up for a drink of water. So I asked my sweet son to do me a favour and fetch me a glass of water. He readily agreed, and before running off to the kitchen, he innocently asked me, “So how much will I get paid for it?”
This question made me realise that I’m planting the wrong idea in his head. To him, if he were to help us do something at home, he was due to be paid for it and he was expecting it.
On the other side of the coin, to me, any chores at home should be shared responsibilities and no one gets paid for it. One of my values is that everyone must do their part within the family.
Obviously this practice was backfiring on me and going against my intended values. Plus, I didn’t want him to feel entitled and not help around the house unless he is paid. Needless to say, I put an end to this and sat him down to re-educate him about shared household responsibilities.
An Alternative Plan
I then showed him many real-life examples of children who started and run successful businesses. The intention was to teach him that you earn money from providing good value to others. It’s also more relatable to him to show him what other children are doing. It’s a form of inspiration and motivation for him, too.
On a side note, I noticed that this had a positive spin on him. He started to value his creative work and ideas more. Not because he wanted to make money by selling his creations. It was more of an awakened inspiration. He saw real-life examples of what children out there can do in providing real value to others.
Teaching Children About Saving Money
One of the key elements of financial education is the habit and value of saving money. On this topic, I like to use the Jars Money System by T. Harv Eker. I first learned about this from his book and found it to be a good money management for adults.
This version is made for kids and is a very simple and fun system. Instead of saving money by a single lump sum into a piggy bank or account, this system breaks up the savings into six different things. Each of them serves a specific purpose with a fixed percentage.
This is the break down of the six accounts and their corresponding percentages.
- Needs 55%
- Wants 10%
- Savings 10%
- Sharing 5%
- Dream 10%
- Financial Freedom 10%
The infographic below explains what each account serves.
This system worked well for us. I started them off by using glass jars and using the money collected from their ang pows. As and when they come into some money, they will split it into the jars. You may need to keep some coins handy so that even if they have just RM1, they can still divide that money up accordingly into the jars by using coins.
Cultivating the saving habit doesn’t necessarily have to start with a big amount of money. Even with RM1, they can still learn how to save meaningfully.
Teaching Children About Spending Money
Spending money must be the favourite part for most of us. It’s why we save in the first place, to have more to spend later!
When it comes to teaching kids how to spend their money wisely, it is a delicate task. Each child has their own personality and has different spending traits. My elder boy is quite a minimalist and doesn’t spend on anything he doesn’t need. My younger one will look for things to spend on, whether or not he needs it.
With the one who doesn’t spend unnecessarily, there’s no issue. When it comes to the spendthrift, my work is cut out for me. Constant talks about the value of money and things come into play.
Spending Money Rightly Or Wrongly?
There’s no right or wrong way to do this. I try to figure out why he likes spending money for the sake of spending money. It’s mostly due to the thrill of having something new. Having saved up for some time, the excitement of having enough to buy something adds to the thrill.
Being an adult, we know better whether the item is worth the price and whether it’s a practical purchase where it will be put to good use. For a child, these things don’t count. All they know is that they have the money now and they just want to spend it.
We have packed up many boxes of their toys and given them away. Some are well used and many are under-used. Quite a few have not even been played with. This triggers talks about wastage and how the money could have been better used on something else.
I find that this takes time to cultivate and won’t work with just a few talks. Even adults will spend money on things that we don’t need. It is a constant reminder for all of us to spend wisely and more mindfully.
However, constantly having talks about wastage has seemed to pay off for me. As my little spendthrift grows, his level of understanding on the wastage he has created seems to dawn on him a little more.
Each time we declutter and get rid of things, there is a hint of regret that so much has gone to waste. I would remind him of such moments when he next wants to splurge on something. They forget easily, so it is our job to remember and remind them until some of it becomes ingrained in them.
Teaching Children About Money By Example
The best way to teach children anything is always by example. Teaching them a theory and showing them the real thing, which do you think they will naturally follow? They would definitely mirror what we do, not what we say. So to get our children’s act right with money, we have to brush up our own act and show them the right examples.