Teaching children about money - How to teach your kids the basics of money?

It's an important issue to teach your kids about money, it's value, games, abilities and to open their eyes to the basic facts and rules about money that they can understand at their age.

Children learn most of their knowledge from their parents in the early years of life. So, you will have to explain the simple rules about money to your kid when you start giving him allowances, when you go shopping together and so on. Buying a pigg bank is not enough (although it's a good step), you will also have to teach him how to save money so he can find some in his piggy bank each month!

Don't expect them to understand everything. In fact, young kids (3-4 years) may not understand the value of money, they deal with money as something that is always "there". They don't know that money doesn't grow on trees and these stuff.

How to teach them ?

Simplify things. They may not understand the real value of money, but you can explain to them that money is something that people have to EARN and that it doesn't come to you by itself or fall from the sky. It's really hard for children to understand about commerce, stocks, real estate and stuff but you can teach them 2 simple words : Save & Spend.

You may want to give your kids some freedom to spend money on things they want but first you should giude them and tell them how to spend, and what should they spend money on. They should be able to set priorities and learn the difference between what's essential and what is not.

Link it to their world

Try to corelate between money and their real life an dheir dreams. Discover what they dream to be and to have and explain how money could help them accomplish their dreams and have the things they need (not everything of course! :) ). You can trai them by making them do some of the house chores for some money, or an increase in their allowance. This way they can learn that money should be "earned". Later on, they can learn what they can do with this money (buy toys, candies , whatever they want).

Before you go shopping, set down with your children and talk with them, make a list of what you are goiing to buy and how much you expect to spend. Make them sharein writing the list. This way they will get used to the fact that they should plan before spending money, and the diffirence between necessities and wants.

In the mall, clothes store or supermarket, let them learn from you how to compare products and their prices and how to find the best product/fruit/toy/ etc. Also, you can make them search for the best deals and sales.

Discussing money issues with children is of value so that you can teach them how to plan for a budget, how spend the pocket money you give them and how they can save money for heir own use.