Believe it or not, learning finances at a younger age makes a big difference. Research show that kids who learn about finances and do exercises while they’re young have better finance management when they’re older (Children and Morey: Teaching Children Money Habits for Life.) But how do we teach kids the concept of money and saving?
Make pretend money, either by doing an easy arts and crafts project, or you can make them on the computer. Either way, make sure the different amounts are represented by a different color. Make all of the different bills up to 20 dollars and fill up a kids wallet, or even a wallet that you no longer use. Depending on the age, you can teach kids different things.
- Toddlers 2-3 Years Old – Let your sibling play with the money, organize it and then put it back in the wallet multiple times. In addition, have them sort the bills by color. This will help them learn how to count as well.
- Kids 3-5 Years Old- Help them learn that they can trade the dollars at the store for little treats, or even treats at home. Have them give you one of the bills in exchange for something they want, and use the bills to teach them to count over 10.
- Kids 6-8 Years Old – Start using the bills as a kind of allowance, and let them use it for things they want that aren’t items, such as staying up 5 minutes later or letting them play with a toy for 10 minutes longer.
Use Coupons in a Unique Way
For kids that are on the older side, have them search for coupons in different brochures. For every coupon that is able to be used at the grocery store, use that as an addition to an allowance.
Use a Piggy Bank
Kids love piggy banks because they can see their money growing right in front of them. Consider decorating a jar with them and making it into their own personalized bank. If it’s partially see-through, your sibling will love learning about saving up money for bigger things and seeing their funds grow.
Teach Them to Give
One of the most important things to teach your sibling is how to give back to the community. In the case that they have an allowance, have them set some money aside to donate to something they want to. It will teach them the importance of sharing and giving, and also how great it feels to give to others. Let them choose the amount, and where they’re going to donate it, as well as handing it over themselves (church, local youth group, or something easy to donate to in town).
David Milberg is a financial analyst from New York City.