Five ways to make your child understand the value of money

Financial training is an important part of good parenting. Parents need to teach their children, early in life, that money doesn’t grow on trees. In fact, they should emphasise on the fact that only hard work can earn money. 

According to the latest study by UNICEF, children begin to recognise coins by the age of three. Gradually, as their cognitive skills develop, they learn to differentiate the value of coins and paper money. While schools might not put in added efforts to make children understand the value of money, the onus to do so lies on the parents. 

Also Read: Making your money work for you is easier than ever

Here are five simple ways to make your child understand the value of money: 

1. Use play-based learning: For kids aged between 5 and 10, you can use the concept of play-based learning in which you incentivise certain achievements while playing. For instance, if you are teaching your child to play football, give them a sticker for every goal they score. Once they collect enough stickers, they can use the bunch to buy a book or a ball.
2. Tell them what a bank is: Tell your child that the bank is actually like a big piggy bank that you use to deposit your earnings. Each time you buy something, the cost of the item gets deducted from the money that you have been saving. Also, tell them that you can only replace this amount with your next paycheck.
3. Teach them the concept of saving: Make a yearly plan for them and ask them to save for the same. Teach them to set aside a portion of their pocket money as saving every month to reach the amount that they need to fulfil their annual goal. This will not only introduce the concept of saving early in their lives but will also help them work towards earning each rupee.
4. Teach them how to trade-off: Teach your kids how blowing off Rs.10 on a bar of chocolate regularly is not a good idea when they can save Rs.10 each week and buy something bigger at the end of the month. This trade-off will help them in learning how to plan their finances for bigger and more meaningful goals.
5. Take them to the supermarket: Involve your kids in the process of choosing commodities based on their price and value. As they grow older, they can help the family with money-based tasks such as booking tickets to a movie or making a list of groceries. The sense of involvement will make them more responsible towards money.

Starting early in making your child understand the value of money is important. By investing time in this, you can make sure that your child doesn’t turn out to be a reckless spendthrift.