Ever had your child constantly hassle you to buy a new toy advertised on TV or at Toys“R”Us? Or how many of us remember telling our children, “Baby girl, money doesn’t grow on trees”?

A report by the University of Cambridge has revealed that kids’ money habits are formed by age 7. It’s important to start cultivating the right values about money in our kids from a young age. Getgo Parents teaches you how!

You can find the Part 2 of this content here.

Take advantage of everyday situations to teach your kid about money

Help your child to experience using money on a practical level and understand the value of money. For example, if your girl is caught up in the Disney’s Frozen craze and insists on buying an Elsa Princess Doll, you can explain to her how many packets of sweets she can buy with the amount spent on that toy. Or you can tell her how many hours mummy and daddy have to work to earn that amount. That way, you can put the price of the toy into perspective and your kid can learn to ask herself if what she wants is really worth the money.

Teach your kid the difference between a “want” and a “need”

A crucial thing to ask your child when he asks for something would be, “Do you really need it, or do you just want it?” By knowing the difference, your kid will weigh the importance of what he wants to buy and think twice before making rash purchases.

The online game Mad Money (see below) can teach your child that wants come after fulfilling basic needs.

Show your kid the different ways money can be used

Money Savvy Generation developed a pretty interesting piggybank called Money Savvy Pig. It is see-through with four slots: save, spend, donate, invest.

Learning from Money Savvy Generation, we can encourage our children to plan for their finances, not merely to satisfy their immediate wants and needs, but also for their future, as well as to benefit the less fortunate. Teaching them to take responsibility over their own money will allow our children to make financial decisions from young and help them to feel more confident and in control of money matters in the future.

Save: The lesson for your child is that he may have to wait to buy something he wants. The ability to delay instant gratification has been shown to predict how successful one will be as a grown-up (See marshmallow experiment). As parents, we can explain to them the importance of saving for a rainy day. (See Mad Money and the concept of “unexpected spending” below)

Donate: This section encourages your kid to be socially responsible and empathise with those in need. If your kid is into animals, you can have him donate some money to SPCA so that his money is spent for a meaningful cause. Or, you can encourage him to donate some money to children’s homes to help less fortunate children of his age.

Invest: If your kid is older, you can teach him that money grows money. By saving up money for his education or books to expand his knowledge, your child is creating opportunities for himself to earn even more money in the future.

Let your kid play money-games on the web

Mad Money: It teaches important things like how to make your money work for you, and helps your kid learn about comparisons to get the best deal or make the most out of their money. Also, another great idea is that they incorporated the idea of an “unexpected spending” in the form of library fines or losing your wallet. Also, Mad Money gets the child to buy everything on the shopping list before he is allowed to buy his desired item using the remaining money (“Want” vs “Need”). Check out Mad Money here.

Playmoolah: This website has a range of tools and programmes which you can purchase to play. What I like about this website is that it is a Singapore startup, and is likely to produce games relevant to Singaporean children, unlike many other sites which teach kids using US or UK currency. Check out Playmoolah for kids here.

Dig out the good ole’ Monopoly Board game

Monopoly provides several teachable opportunities for money management. Kids will expand their understanding on what money can be used for, as well as learn that by spending money on something, they will lose the opportunity to buy the next best thing that comes their way.
Other board games to consider: Game of Life, Cashflow for Kids, and The Allowance Game.

Lastly, and most importantly, lead by example

They say kids follow in the footsteps of their parents. Kids are very observant, and we may not realise it, but they are learning from the way we spend our money. If we want our child to be prudent in his spending, we should be prudent with our money as well. For one, when I was younger, my mum led by example by handing us dollar coins to buy tissue paper from some elderly folk selling them in hawker centres. She showed us that by spending our money this way, we can benefit the less fortunate instead of always having all our focus on ourselves. Evidently, what our parents do or say influence us in our life-choices as we grow up, and remember, our actions say much more than mere words!

Sources
The 5 most important money lessons to teach your kids
6 fun ways to teach kids about money
Tips to teach child money matters
7 board games that help kids understand money