One of the most neglected skills in school is something everyone deals with on a daily basis – money.
Related: Raising Financially-Savvy Children
Studies have shown that kids who are taught the value of money and graduate high school with a basic knowledge of important concepts like mortgages, credit cards and loans are more likely to be financially successful later on in life.
This is the first part of a small series on tips & tricks for teaching kids about money.
Playing with Coins
Experts say at ages 5-6 the most important part of teaching money to kids is to start slowly and have them see and feel money.
One simple way to do this is to gather up some coins and lay them out on the floor for them to see and feel. It’s important that at least one of each type of coin is in the pile so none are left out.
Then you can teach him/her how much each one is worth. Since they range in size, they’ll likely assume that the smallest one is worth the least – and it’s your job to show them that is not the case.
You can show them the pictures on each coin and what they mean. Eventually, they should be able to sort the coins into different piles based on their values – from largest to smallest.
For 6 year old kids you can also explain the idea of equivalents – how one dime is worth two nickels. You can also introduce paper bills and how much each is worth. Eventually you’ll want to relate the value of the coins & bills to things they can see, feel and touch – household items like a juice, candy bar or toy (all items they’re familiar with). You can ask them how much they think each item is worth and get them to show you that value in actual money.
The Tooth Fairy
The average child loses their first baby tooth at around 6 years old – and this is a perfect opportunity to incorporate a money lesson into their life.
How much the Tooth Fairy gives varies between families but a recent Visa survey showed that about 80% of kids get between $1-2 per tooth.
Once the money arrives from the Tooth Fairy, you can talk about what the actual value of the money is – what it will buy, and what their plans are for the money. They’ll like this as it means they’ll get to spend some money on something they want.
Another easy way to show kids the value of money is to take them shopping and let them see how money works in action.
A quick trip to the grocery store can be a great opportunity to show how money is used to pay for everyday items they see at home.
When it comes time to pay, make sure to show them how much money you are using to pay for the items and how much they cost. Obviously, this works best if you pay with cash as it gives them a chance to make a connection between the items they see and the physical money being handed over.
The tricky part will be when you receive change (unless you pay the exact amount). This might be confusing unless they have a very clear understanding of physical money and might need some further explanation later on.
Budgeting at a Theme Park
A trip to a theme park can be a great chance to teach kids about spending money.
Kids will be overwhelmed with things they want to buy, so if you’re looking to avoid them constantly asking you to buy every single item – consider giving them a set amount to spend.
You could give them $20 to spend each day at the park on anything they wish – with no judgment on your part.
Not only will you avoid the constant nagging, you’ll also get to introduce basic concepts like price comparison, purchase decisions and a maximum budget.
I’ve heard from parents that this works great – it gets kids involved in making decisions about money and teaches them first-hand how far their money can go.
If they want to spend it all on one overpriced souvenir – totally fine, as long as they know they won’t be getting any more spending money that day.
Conclusion: I believe teaching kids about money is very important and should start at an early age. Taking them shopping, theme park spending money and showing them physical money are all ideas to get kids involved with money at ages 5-6.
What other ideas do you have to teach kids about money at ages 5-6?