Financial education is pivotal in enhancing the long-term growth of individuals. However, most of the schooling system does not focus much on creating an environment of financial literacy from an early age.
This means if you want your child to have an idea of how money works in society, you will have to introduce it to them yourself. To help you get this right and not make it overly complicated, here’s our age-by-age breakdown of giving your children the right kind of money talk.
1. Ages 2 to 3
The easiest way to get started on talking about money to kids is to teach them how to identify currency denominations, just like you do with alphabets.
Put out different coins and notes, teach them the value of each denomination . You can also test them by asking them to arrange the denominations in ascending/ descending order to see if they have understood value clearly.
Another practical and fun way to teach them value is to play store, where they can be the shopkeeper to their toys and you can ask them the price, negotiate, etc.
2. Ages 4 to 5
As they grow a little older and start tagging along with you to departmental stores, ask them to look for offers or teach them the concept of coupons. This will be a practical introduction to the concept of saving.
A lot of kids also like to pretend play restaurant at this age. You can encourage them to ask for money at the end of pretend meals to help them understand how transactions work in the real world.
3. Ages 6 to 8
Once you start paying them some pocket money or monthly allowance, you can also introduce them to a children’s bank account rather than a piggy bank. This will make it easier for them to familiarize themselves with the banking system from a young age.
They will also learn about interest rates, how to deposit money into their accounts, update bank statements, etc.
This is also a good age to start encouraging hobbies such as coin collecting to create an added interest in finance.
4. Ages 9 to 12
Once they are on their way into teens, it’s time to introduce them to comparison shopping. Ask them to pick out branded and generic products at the supermarket, compare the quality, and then decide whether the branded ones are worth the extra money.
You can also put them in charge of donation collections or make them an accountant to your online business for a day. This way, they will know how to interact with people in transactions and make sure that they get the right price for their products.
It will also teach them about negotiation, which is an absolutely important quality in the real world. At this age, you can also ask them to use cheque books for transaction and learn how to write them correctly.
5. Ages 13 to 15
Finally, it is time to teach your kids the concept of stocks. To make it more exciting for them, ask them to check the prices of stocks they love (like Apple, Coca Cola, or KFC) on the internet.
Teach them how to see the performance of stocks according to various time periods and ask them whether they think it is a good time to invest in these brands.
This is also the time to teach your kids how to budget and help them understand how to divide their allowance justly between wants and needs.
6. Ages 16 and up
Teach them how to make online and electronic transactions safely. Have a chat on how they should be careful about using their money online and the guidelines they should keep in mind to prevent scams.
From not sharing OTPs to not responding to unidentified mails, the current vices in the financial world are very elusive and any young teenager without experience can fall prey to its lures.
These are our suggestions on how to teach your child about money at every age. If you think you can add something more for your community, then tell us in the comments below.