Fun Ways To Teach Your Children About Money

As a child, did you get any moment management lessons from your parents? If you did, then you are probably in the minority as research shows many Kenyans received little to no financial education from their parents. 

And even for those who did, the advice would typically have been unstructured and random that the child would not internalize the importance of the lessons. So, a large part of our money mindset is established through observation growing up and experimentation once we start earning an income. 

One can only imagine how far better they would be if they had been given early enough help about being financially savvy. Definitely, a lot of financial mistakes could have been avoided. 

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You have heard stories of well-paid Kenyans going broke immediately after retirement, or living from hand to mouth immediately after losing a job. 

You most probably don’t want this for your child. And you would be happy to know that children will respond positively to intentional money management training. That said, you want to make it as fun as possible for them and not another classroom scenario. Here are a few ways you can try.

Provide a Source of Income

One of the practical ways to get your child to learn how to manage money is actually making sure they have some money of their own. They will be learning the concept of money being scarce and has to be earned. 

Household chores could earn them allowances that can be deposited into a children’s bank account directly, a piggy bank or money jar. 

You can also allow for negotiations for higher allowances when the children decide to do more work. This way, the kids learn value for their hard work. 

Additionally, allow them to spend. 

The most obvious benefit of having money is the absolute joy of spending it. Occasionally allow your child to buy that item that they want with their money. Be it a toy, a snack, a comic book etc. This may develop a good relationship with money based on the healthy perspective of earning in order to spend.

Tax Them a little

Most people encounter the reality of taxation when they receive their first paycheck. It can actually come as a big shock for someone who did not negotiate for the salary based on net pay. 

You can teach your children about taxation early on by literally ‘taxing them’. This is not exactly like the running joke that “the best way to teach kids about taxes is by eating 30% of their ice cream.” 

You do not want to upset them in such a manner but rather come up with ways that teach them responsibility such as withholding a portion of their allowance and putting it in a tax jar. You should explain why you are doing so - as the government does to pay for public services. 

You could also require them to pay a ‘tax’ every time they do not complete tasks such as making their bed or as punishment for some bad behavior. 

Later on you can give back the money in the tax jar for their spending as a ‘tax refund’ or to show the use taxes can be put to by the government. This will also teach them the benefits of saving.  

Have Them Track Their Spending

Another step to becoming a better saver is to know where your money goes. If you give your children allowances, get them to note down their expenses each day and total them up at the end of the week. This could be an experience to open their eyes. Encouraging them to give more thought to their spending habit eventually changing their spending patterns getting them to achieve their savings goals.

While at it ensure you teach them how to differentiate between needs and wants. As they note down their expenditure, sit down with them and identify what falls under either wants or needs. 

Teach them how to pause and think before making an impulse buy. You can use prompts such as ‘do you really need it?’

Set Savings Goals and providing a place to save

To help them truly understand the value of delaying instant gratification and saving up, you should help them create some objectives they would consider worth saving for. 

If they have something to save for, you could help them break their objective into manageable bits.

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Again, you can use money jars - one for savings, another for spending and the third ‘tax jar’ or piggy banks. You could also choose to open a kids’ savings account for them at a bank.

Ensure they are tracking their growth and they do not lose track of the reason they are saving. Ideally, do not add your own money to their piggy bank - you will be watering down the joy they will get once they have met their objective knowing the reward is directly related to their efforts 

Offer Savings Incentives

Who does not like free money? You could offer some amount as a reward to your child when they get to their savings goal. For example, if the goal is to save up to Ksh1000 – you could offer to reward them a percentage of what they have saved. Or you could reward them for hitting milestones. Like  Ksh100 when they get to the halfway mark.

Teach Them How Their Money Can Grow

Saving is a good habit. However, If you want your child to learn about how to build on their own wealth, you have to teach them how to invest. It is important that they learn not to just save money and let it sleep in an account but how to get it to grow at a faster rate.

If you are not investment savvy, you could buy them a book on their level that teaches them how investment works. 

Be a Good Example

How you discuss and manage your money goes a long way to teach your kid about money. If you are breaking the very rules of money management that you are trying to impart, you will be sending the child mixed messages

Do not be surprised if the child grows up to take after you. In fact, the engagement with your child could also help you improve your money management. 

If you would like your kids to develop good saving and spending habits, they will need to see you making smart decisions on spending and saving. In other words, practice what you preach. And be consistent in your preaching. 

Leave Some Room for Mistakes

One of the ways of putting your child in control of their own money is allowing them to learn from their mistakes. However much it is tempting to step in and guide kids away from a possibly costly mistake it would be better to use the mistake as a moment to teach. This way they will know what not to do with their cash in the future.

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Act as Their Creditor

One of the basic doctrines of saving is to not live beyond your means. Sometimes your child has something they want to buy and is too impatient to save for it. 

Acting as your child’s creditor can teach a very good lesson about saving. Say your child wants to purchase a toy that costs Ksh500. You can “lend” the cash and require repayment from the allowances you give, maybe with interest. The lesson taught would be that saving may require delaying gratification a bit longer, but the thing you want to get will eventually cost less if you wait.

Giving to charity

Children should learn that opportunities to get money are diffused with the obligation to serve the less fortunate in the society. You could decide what percentage of your child’s income should go to philanthropy. It should be a consistent percentage. Whoever receives the money should be a choice made by the child. The child might discover the joy that comes in caring for others in the process.

Involve them in budgeting

Older children should be involved in household budgeting. If they are interested in cooking, you can ask them to plan out a meal and budget for the cost of ingredients then you can calculate the cost per serving. 

This can help them appreciate the value of money. Additionally, involve them in every real-life money decision including planning out a vacation, important family purchases etc. By involving them in such activities, you are empowering them to make decisions independently. 

Wrapping up

We all want the best for our children, don’t we? Not necessarily to have trendy things or the latest gadgets or the best clothes but mostly to have a good and secure future. Perhaps you could lay a foundation for a future they can build upon as they make themselves better. 

Remember that all these suggested ways can be easily implemented without adding any extra burden to your already busy life. And you can be sure that teaching your children how to be smart with their money at an early age will earn you and them huge dividends.