How do I teach my kid about Money?

Money management for kids across different age groups- Parenting resources by ZenParent

“Money can’t buy happiness. But neither can poverty.” – Leo Rosten.

Money management is one of those topics you’re not quite sure when to introduce to your kids. You don’t want to make it sound as if it’s the most important thing in the world. At the same time, you want to make sure that they understand that not everything can be available to them when they want it.

Here’s a handy guide to help you introduce the concept to your kids.

Ages 3-6

These kids are probably too young to understand “allowances” or pocket money. Instead, it’s fruitful to introduce the concept of “saving”. Tell them that mommy or daddy goes to work and earns “money” for their hard work. And they can too. Buy them a piggy bank and give them a coin for everyday to “save” once they do a chore – e.g. sorting the laundry, or emptying the dishwasher. Don’t necessarily equate money with daily chores since the kids may start expecting money to do their regular responsibilities. When you add some money into your kid’s piggy bank, explain the purpose behind it, for instance, you’re helping your child to collect enough money to be able to use it at a time of emergency. Remember- the idea is to make them understand the value of money and the fact that the money in the piggy bank is not for spending on trivial things.

Ages 7-10

As kids grow, with their rationale evolving; their understanding about the concept of money should get better too. They can now know that using money is a finite process. Once exhausted, it’s done. You can now give them a weekly or a monthly allowance to spend as they’d like in a responsible manner. This can be in tandem with money for chores or separate. To get them to understand how it works, you can offer them Rs. 100 (or denomination of choice) at a supermarket and let them choose what fruit they’d like to buy. Or you can explain, for instance that you chose the milk that was Rs. 10 cheaper because it tasted the same as the more expensive “brand”. You can teach them to read price tags and what that means. You can teach them the different denominations of money – notes and coins and make a fun activity to “make up” the money with the different notes and coins they have. For instance – “If a mango costs Rs. 25, then how many notes can you pay it in?” This makes them put their own purchasing powers in perspective as well as the responsibility that it takes to make that amount.

At the end of the day, if your child understands the difference between “needing” and “wanting” something, you’re well on your way!

ZenParent Tip: A fun yet beneficial way to help kids learn money management is by playing monopoly or similar games/ apps available today.

Image source – © Jaya Parasuraman