Sure-fire Ways to Make Your Child Money Smart (Part 1)

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Matthew Imerhion

Teaching your kids about money is just as important as teaching them sexuality education. As Jonathan Swift, a famous writer once said, a wise man should have money in his head, not in his heart.

Find gold nuggets to help your child get the right head start and perspective about money.

Nugget #1: Understanding it’s purpose

The concept of money can be introduced to children at the age of 5. This is about the same time this topic is introduced to them at school under the subject, Numeracy or Mathematics. Based on your child’s level of comprehension, explain the value of money in simple terms. Money is what we use to buy goods and services such as the food you eat, the clothes you wear and the toys that you play with.

Nugget #2: To Every Man, His worth

According to Dave Ramsey, co-author of the book, Smart Money, Smart Kids, “Teaching kids about money is never just about money.” From the age of 7, children can be taught on how to earn an income. This income is however dependent on what they have to offer. If they do not have anything to offer, they cannot get anything in return. Give them tasks that can enable them earn an allowance or get their special requests granted.

Nugget #3: Make Money 101

For teenagers between 13-19 years, this could be a holiday or vacation job, weekend errands, and extra house chores. Teach them that people have needs and are ready to pay money to have these needs met. Let them know that there are services of value they can offer other people.

Nugget#4: Time and Money

It’s almost impossible to teach financial wisdom without talking about time. Children should be taught that they have to sacrifice time and effort to get money.

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Nugget #5: ‘B’ for Bank

They have to learn to earn money, spend some and save some. Teach them the wisdom in delayed gratification in terms of always saving a reasonable fraction of every income earned; teach them to save. Tell them stories of those rainy days when your savings had kept you warm and dry.

They should start getting to know the bank and what goes on in there. Draw parallels between their piggy bank and the real bank. Tell them why they should eventually take their money to the bank; for safe keeping and the multiplier effects.

Nugget #6: Kids Bank Too, You know?

Open an account for your kid, one they will have to run with you as co-signatory. Offer incentives for them to save more and longer. For instance, a certain percentage of their total savings as contribution from you for a specified period is sure to motivate your child to save more.

…to be continued.