Teaching your child about money can feel like an impossible task. Money concepts can be complicated, and children may not always have the patience to fully grasp them right away. That’s why it’s important to make learning about money fun and interesting—after all, fun is one of the best teachers! Here are seven fun ways to teach your child about money and help them develop financial literacy skills that will last a lifetime:
Take Them on Shopping Trips
Create a shopping list and set a budget together before you head to the store. Challenge your child to keep track of the total as you put items in the cart. You can even teach them how to calculate the cost per unit. For example, one box of cereal may seem more expensive at first glance, but could actually be cheaper per ounce than the lower-priced alternative. You can show them how to compare prices on meat and produce by calculating the price per pound to find the best deals. This is also a good time to teach them about sales, including how discounts and coupons work and how they affect the budget.
Play Board Games
Board games are always fun and, often, children learn new concepts without even realizing it! Classics like Monopoly, PayDay and The Game of Life introduce concepts like managing money, cause and effect, and how different events can impact finances. Other games like The Allowance Game and CashFlow for Kids teach children about earning and investing, while Money Bingo helps younger children practice counting change and bills.
Create a Family Bank
Similar to how teachers reward good behavior in the classroom with things like tickets or stars to trade in for prizes, a family bank rewards your child with money for completing tasks, doing chores or performing random acts of kindness.
Assign different values to each task based on how much time and effort it takes or the positive effect it has on others. For example, a simple task like brushing their teeth could earn five cents, while a kind gesture to a sibling could earn fifty cents. At the end of the week, open the family bank and let your child “withdraw” their earnings to spend on rewards like extra screen time, a special treat or staying up late on the weekend. This helps them understand how their actions and how hard they work affect how much money they make, which, in turn, affects what prizes they can afford.
Start a Lemonade Stand
To teach your child the basic principles of business, encourage them to start a little “company,” selling a product to friends and neighbors. During the warmer months, maybe it’s a lemonade stand, while during the holiday season, it could be a hot cocoa stand or a homemade greeting card delivery service.
Help them shop for supplies and price their product so they can make a profit. This helps them learn basic business principles, including profit margins, budgeting and reinvesting earnings. Introduce concepts like shipping costs if you have family members living out of state—if they sell non-food items, of course! By helping them start a small neighborhood business, you can teach them how earnings can fund the business and generate extra money for them to spend, save and donate.
Set a Savings Goal and a Budget
If your child has their eye on a big-ticket item, this is the perfect opportunity to help them understand its value by having them save up to purchase it themselves. Start by encouraging them to set a savings goal. Prepare them to save a bit more than the item costs to cover the sales tax. Ask them to brainstorm ways to make money and add to their savings, such as doing chores or saving birthday money. Together, create a plan to save a specific amount each week until they reach their goal.
This teaches them the importance of consistency and resisting the temptation to spend their money on smaller items, as this could set them back from achieving their larger goal. This practical experience fosters patience and respect for money—nothing helps children understand the value of money quite like purchasing a pricey item on their own!
Make it Visual
One of the best ways to help children understand money is by helping them visualize it. While most of us operate digitally now, it may be worth putting cash in a clear glass jar so they can watch it add up. Or, if you decide to keep their savings in a bank account, create a chart together that shows a path to their savings goal, and have them color it in as they move closer to their goal. This is a tangible way for them to see their progress instead of reading numbers on a screen. Plus, the chart can be as creative and colorful as they want!
Help Them Divide Their Allowance Money
At its core, financial literacy involves understanding how to divide your money and where to allocate it. If your child receives an allowance, help them divide it into categories like spending, saving and donating. If they’re saving up for something, explain that they may need to save more and spend less of the money they earn to reach their goal sooner.
This is also the time to teach them that all the money they earn doesn’t have to be kept for themselves. Explain the importance of donating, and help them research a cause they want to donate to. When helping them divide their money, it’s helpful to put it into envelopes or some other organizer to help them visualize where their money is allocated and how much they have in each category.
With these fun and simple ways to teach your child about money, they will be well on their way to financial literacy. Just like teaching them about money, choosing the right school is crucial for preparing your child for life. Lake Forrest Prep is an Orlando preparatory school dedicated to building a solid foundation for our students, setting them up for success in their education and in life beyond school. Learn more about us here or contact us to schedule a tour.