How to teach your children about money

10 Jul, 2024

Teaching children to understand money early on is critical for their ability to handle finances later in life. Financial literacy means knowing how and why to make intelligent choices with cash.

For many parents, figuring out when and the best way to teach their little ones about finances might seem tricky, even if they have a Children’s Savings Account. But starting soon is a great idea. With something simple like using clear jars to save coins and notes, children can see their savings grow, which helps them grasp what saving means. Don’t forget that parents lead by example by teaching responsible financial behavior and showing good habits with their spending and saving practices.

As children grow up, learning more complex ideas related to finance, such as making budgets, understanding investing basics beyond just hearing the word thrown around, recognizing differences between things you want versus stuff you need becomes crucial too.

Introducing all this sooner rather than much later equips children with solid money management skills that’ll come in handy not just now but far ahead down the road throughout their entire lifetimes. Teaching these skills during the teen years is especially important as it prepares them for the future and helps them become responsible and financially savvy adults.

Let your children to freely express their wishes and encourage them to achieve their dreams through saving. However this effort should be done by the whole family and set the right example for your children.

 

Discussion:

The concept of saving is not a difficult term for children to understand, especially for its value and the benefits it will bring. A good starting point for this discussion is “Wants Vs Needs”. Teaching children how to tell the difference between things they want and things they really need is a crucial step in learning about money management. By encouraging them to carefully think about what they’re buying, they can determine if something is just a nice-to-have or a must-have. They must learn that their needs should come before their wants and that buying something on a whim isn’t always the best idea. Talking with your children about how valuable money is and how to use it wisely helps them understand this concept better. With knowledge of wants versus needs, children can make more intelligent choices with their money and improve their ability to plan their spending. Moreover, there are plenty of podcasts created specifically for children, where people talk about and explain basic financial terms and practices which you can listen to together.

Piggy bank:

Although it may be considered an older means of saving, it is still considered to be a symbol. A piggy bank in their room will be a constant reminder to save. And let’s not forget how much joy they will experience once they see the amount collected. Making a DIY piggy bank is more than just an enjoyable activity. It’s also great for teaching children because saving money matters. You can start with simple things around the house, like empty jars, cardboard boxes, and even recycled stuff. Let them have fun decorating their piggy bank in their own style. Talk to them about what a piggy bank does and how it can help them keep some cash aside for later, especially as they enter elementary school. This way, they’ll learn all about saving while getting creative and working on their hand skills.

Financial goal:

Put together an achievable financial goal and set a time frame to achieve it. Explain to them about their daily needs and teach them how to manage their pocket money. The money they save can be allocated in buying what they want, for example a toy or a bicycle. Break down your goal either by month or week or even a year.

Game:

Playing games can be an excellent way to learn about money while having a good time. There are lots of educational resources out there that have games all about money just for children. Also, there are many money-related app games that you can download and play together. By participating in these activities, children will learn how crucial it is to understand the value of money, why saving is important, and how to make smart choices with their finances.

Reward:

By giving children chores that fit their age and offering them an allowance when they finish these tasks, you can teach them a valuable lesson. This first step of earning an allowance introduces children to the value of money and making choices for themselves. It would help if you also encourage your children to save some of their earnings for something special they want. This way, they learn how important it is to make intelligent financial decisions and see the link between working hard and earning money.

Bonus tip:

Set a good example for your children by starting to save yourself. It’s simpler than you think and you can achieve it with a Savings Account from Ancoria Bank.

 

Teaching children how to manage money is super important for their future. By making learning about saving, budgeting, and investing fun and interactive, you give them good habits from the start and they learn firsthand about managing money. Moreover, some activities show them why being smart with cash is essential and helps them become more responsible and independent. Begin teaching your children financial literacy today so they can be excellent at managing their finances in the future.

 

You can open a Children’s Savings Account at any of the Ancoria Bank Banking Centers in Nicosia, Limassol and Larnaca.