We all know that it is important to make sure that your child learns important financial lessons that can help him or her later in life. However, it can be difficult to figure out how to help your child relate to money in a meaningful way. After all, a five-year-old isn’t going to grasp the concept of interest. However, there ways to help your child relate to money in ways that are age appropriate, and it’s important that you begin teaching the value of money as soon as possible.
Many Children are Visual Learners
In many cases, children need to be able to see how something works. Many children are visual learners; those under the age of eight or nine might have an especially difficult time with abstract money concepts. Visual representations can help. A jar that allows children to see the way money grows can help them see (and experience the excitement of) the value of saving. My son still likes to see how money stacks up in his jar.
You can also make visualizations of goals. When my son was saving up for a specific toy, we made a chart, with squares representing each week of allowance (after church donations and savings were taken out, of course). At the end of the row of squares was a picture of the toy, cut from an advertisement. He loved coloring in the squares, and seeing how quickly he could get his new toy.
In order to help my son understand charity, we frequently take food to the food bank. When he sees how our donations help others, it creates a good lesson. I’m planning to take him to the local child and family support center so that he can see how donations of money and toys can directly help children his age. (He already enjoyed seeing how a donation of his trucks to the church nursery was of benefit.)
What Does Your Child Like?
For older children, it can help to relate money lessons to things that they like. When teaching the value of investing, you can use stock market games online to teach them how to choose valuable stocks. It’s sort of like playing a game, and it’s something that can be translated into the real world. (If your child has a job, consider helping him or her open an IRA.) Find other things that your child enjoys, and use those items as teaching tools when it comes to money.
Let Your Child Make Mistakes
One of the best ways to teach a related lesson is to let your child make a money mistake. My son experienced serious buyer’s remorse when he used his money to buy a toy to be like the other kids. Suddenly, he didn’t have the money to buy the toy he really wanted. Letting him make that mistake has produced someone who is a little more thoughtful about his expenditures (at least for now).
You can also let your child make the mistake of borrowing money from you. Charge a small amount of interest so that he or she understands that interest is a real force in the world. Experiencing some of the little mistakes now, and learning from them, can be a good way to help your child steer clear of bigger mistakes later.
Letting your child be part of the money experience is important. Look for ways to make money lessons directly relatable to your child, whether you are teaching saving, investing or giving. It will make a bigger impact, and hopefully encourage your child to act more responsibility as he or she grows.