Raising Money-Smart Kids

Teaching your kids early on in their lives about money can help them make smart long-term financial decisions. MH gives you an age-by-age guide to helping your young ones on their financial journey.

WORDS NURULHUDA SUHAIMI

Forming good money habits in your child is extremely important as it can have lifelong consequences for your little one. The lessons your child learns about money in his early years will create the solid foundation he needs to navigate his way through his finances in the future.
    
Teaching your child about money does not necessarily have to be a difficult and daunting task. You do not need to create a step-by-step lesson plan, where you sit down with your child and teach him about those dollar bills. Simply using your day-to-day activities as a learning guide is a great starting point towards your child’s financial knowledge. If you are unsure of where to start, we have some age-appropriate tips and activities you can use to provide your child with a good head start on his learning journey into finance.

Age 3
Children at this age might not completely understand the value of money. Show them a $1 coin and a $2 note, and they will probably assume that the coin is worth more. Don’t worry if your child is the same way—at this point, it is not crucial for your child to know about the value of money.
    
Instead, you can first teach him to identify the different types of coins available. A simple activity you can do together is to colour in the image of the coins on a piece of paper. Let your child study the different images found on different coins and at the same time, point out to him the various values of the coins. You do not have to teach him that $1 has more value than 50 cents; the aim of this activity is just to let your child recognise the different coins.
    
After your child has learnt to identify coins, you can get him to sort the coins into their respective values. You can cut out the paper images your child has coloured in earlier and paste them onto small jars or trays and have your child place the coins in their correct places. This helps to cement your child’s identification of the coins, thus ensuring he fully understands the different types available.     
Age 4
Children love to play pretend, so why not use this opportunity to teach your child about how money works? Setting up a pretend grocery store at home is a fun activity the whole family can take part in. You can use play food (or even real vegetables or canned food), label them with prices and let your child “shop” for his groceries. You can also create play money if you do not want your child to handle real notes and coins. Don’t just let your child be the customer, though. Playing the cashier is a good way for your child to practice his basic mathematics skills too.
    
If the whole family is keen on a more elaborate pretend play activity, you can create a pretend restaurant during meal times. Prepare two or three simple dishes, have your child create the menu with the food and prices listed, and you are ready to open up your restaurant for the rest of the family. Again, you can let your child play different roles in the restaurant such as customer, waiter and cashier.
    
For a pretend play activity with less hassle, you can set up a snack bar for your child at home. Place various snacks in small containers labelled with different prices, and whenever your child wants a snack, he can buy them with his play money.

The lesson for your child with all these pretend play activities is to teach him the basic act of exchanging money for goods. He might not completely understand the whole concept yet, but it is important for your child to learn that certain things in life will not be given to him for free.

Age 5
With all that spending in the pretend grocery store and restaurant, it is important you teach your child about saving his money too. This is vital in your child’s understanding of money because he needs to learn there are times when he has to wait for the things he wants. For example, if your child wishes to buy a toy, use this opportunity to explain to him that he needs to save some money before he can buy the toy.
    
For your child to start saving money, however, he has to receive some money, whether he gets them from an allowance or by earning them. This choice is ultimately up to you as the parent. You can choose to give your child a small allowance or have him do age-appropriate chores around the house to earn some money. Give him a piggy bank too for him to store his savings. A personal tip: pay your child in coins rather than small notes. I remember the feeling of satisfaction I got from hearing the clink of the coins as they hit the bottom of my piggy bank as well as the excitement I felt whenever I picked up my piggy bank and felt it get increasingly heavier as the days went past.

You can also have two separate boxes for your child—instead of just one piggy bank—and label each box with “save” and “spend”. This way, whenever your child receives some money, you can teach him to divide the money equally between the two boxes. Let your child use the money in his “spend” box on small items like snacks or stickers, and explain to your child that the money in his “save” box can either be used on something he has wanted for a long time or be deposited in his bank account.

Age 6
When your child hits the age of six, it is time for him to realise that there are times when he needs to make choices when spending money. For instance, when you are in the supermarket with your child, talk to him about why you are choosing certain brands of items over others. You can even give your child a small amount of money and have him choose small food items to buy such as fruits or bread. Point out to him the different prices labelled and guide him towards making the most cost-effective choice.
    
Even though your six-year-old might still seem too young, this is a good age for him to be involved in adult financial decisions. Of course, we are not talking about paying the bills or investments. For example, when the whole family is out shopping, include your child when you are deciding on how to spend your money by voicing out your thoughts and questions. Ask aloud, “Do we really need to buy more vegetables for dinner tonight? There is still some left over at home.” or “I think we should buy the loaf of bread from the other bakery. They are selling two loaves for the price of one.” When your child listens to these types of conversations, it enables him to process and learn the different choices you are making when spending money, thus teaching him that money is limited and cannot be spent freely.

Thanks for sharing!