Managing finances is one of the key life skills that we all need to learn. Understanding how budgeting works and what it really means is important if you want to keep control of the purse strings and save for those important things. The sooner you start teaching children about finances, the more likely they are to develop sensible budgeting skills.

Develop Your Own Skills First

Got a child crying out for the latest video game or toy? Do you want to teach them the value of money and explain why they can’t have it yet? The truth is that many parents find it difficult teaching children about finances because they’re bad at managing money themselves. If you want to instil the importance of budgeting in your kids as they grow up, then you need to become good at it. Review how you handle money and start making the changes that matter.

Start As Soon As Possible

Children are information sponges, so the earlier you can start teaching them about money the better. That normally begins when they learn to count. You should be introducing the concept of money and explaining what we use it for and developing those key skills and attitudes which matter from as early as 3 years old.

Kids learn at a very young age that their parents can get them stuff. They don’t generally think about the consequences. They don’t understand that mum or dad needs to work extra hours to buy that games console or organise a birthday party. Getting children to understand this aspect of finances is difficult but is an important part of finance sense development.

The Value of Money

Rather than money appearing out of thin air, if a child wants a toy or treat, showing them how to save for it can be a positive learning experience. The Guardian suggests having labelled jars for different things. You could have one jar for saving up for a treat, another for spending right now, even one for sharing with friends. If your child does chores they could earn extra pennies to put in their jar/piggy bank.

When teaching children about finances, you also need to make it relevant. That means letting your young pups make decisions regarding their finances and allowing them to make mistakes. That could involve letting your child spend on something and then realise the error of their ways when they can’t afford another thing they want. According to Forbes getting your child to set a goal and save for it is a great way to develop money awareness and teach them that you often have to sacrifice to get what you want.

Joining the Weekly Shop

Involving your child in putting together the week’s shopping list and taking them out with you to the supermarket is another way to get them to understand finances. Most of us just drag the kids around looking for products and filling up the trolley rather than challenging them to become more involved. Can they help you find the cheapest product, for instance? Turn it into a game and your kids will learn a lot more.

You can start teaching children about finances when they are as young as three years old. Starting to develop their awareness at this early age can make it easier as they grow up and can mean your kids reach adulthood with a strong understanding and the skills necessary to manage their budgets effectively. It’s something we should all be introducing if we want our kids to benefit.