Understanding money is a vital life skill, and one that doesn’t always come naturally, especially in our culture where we’re taught to keep money matters private. It really helps kids grow up to be confident and secure money managers when they’re introduced to simple finance early on and shown how important it is.

Choose age-appropriate activities to help your kids understand about money and how it works. Some of the ideas we’ve gathered will appeal to young children while others are more suitable for older kids, maybe tween or teens. 

Talk About Money

It sounds obvious, but as parents we often don’t want to burden kids with money issues. That’s not to say you should have a big, heavy conversation with kids, but rather let it be part of everyday life. 

Show them how you manage the household budget, revealing the starting figure then showing how the total amount available becomes less as necessaries are paid for. 

Another idea is to tell them the budget when you’re food shopping, then add up items in the trolley as you’re going round the shop, pointing out cheaper alternatives and why you might choose them or buy the dearer one.

It’s all about clueing kids in on how money works and how, sometimes, we can’t have everything we’d like straight away.

Explain About Needs versus Wants

This follows on from the point above, and it can be a hard concept for children to grasp when it can feel like a life and death situation to them if they don’t get the latest toy or fashion item. 

Learning to separate what they really need from what they’d quite like can help them grow up learning how to set their priorities in life and act accordingly. It’s painful sometimes, but a very necessary life skill. There’s more info on needs and wants here.

Start them Saving

Even very young children enjoy watching savings pile up in a piggy bank or savings jar. It’s a good opportunity too, to bring in conversations about the value of money, since kids often don’t understand that one paper note can be more valuable, and buy more, than a handful of pennies.

You could set savings challenges, promising to match their savings on a certain date in the future if they manage to meet the goal. Don’t set the date too far into the future, especially for young children when a week can feel like a lifetime. Choose a treat that means a lot to them and encourage them to save towards it. 

Talk About Jobs and Earning Wages

Even though lots of children see their parents going out to work every day, they don’t always make the connection between this act and having money to spend.

You could talk about what they’d like to do in the future, explaining about how different jobs earn different salaries. Most kids want to grow up earning lots of money, so it’s important they realise that school and learning plays a role. 

Talk about qualifications for different jobs or how pursuing passions can lead to professionalism. Maybe keen gamers will become coders or developers, or maybe those who love working with numbers will go on to study accounting. 

Conversations can open kids’ eyes to the opportunities out there and encourage them to aim high.

Involve Them in Family Decisions

Include older children in decisions about family spending, especially on larger expenses such as holidays. Invite them to research destinations and costs for travel, food, hotels, equipment or clothing. When you’re deciding where to go, show them how cost can influence decisions, and how compromise is often a factor.

Talk About Banking

Open bank accounts with children and show them how banking works. You could let them watch as you use your online banking service, showing how to check balances, make payments or transfer money between accounts. You don’t have to share all your financial details, just a few relevant exercises. As well as being a practical lesson, it can help to underpin how understanding accounting helps with household budgeting.

You could also talk about borrowing money. Include interest rates and credit cards so they can begin to grasp the basic principles of not borrowing unless it’s necessary, and how loans cost more in the long run.

Conversations about banking are also a great way to bring in different ways to pay, such as cash versus card. Debit card payment can seem like magic to young children who don’t understand the connection to banks and available funds.

Every family is different, so how you choose to teach your kids about money is a matter of personal choice. The aim should always be to make it fun and rewarding, so money matters are demystified, and kids grow up able to make confident decisions.

Disclosure: This is a collaborative post.