As your children start to grow, it’s not uncommon for them to start questioning money and how money works. You might hear, “How much money does that cost?” or “How much money is five dollars?” Once they start asking these questions, it’s an ideal time to start educating them about money so that they can make smart financial decisions in the future.
Here are three ways to teach your child the value of money.
1. Use a piggy bank to start saving.
Using a piggy bank is the perfect way to teach your child about saving money. Your child can start by saving things like birthday money and other funds they are receiving. Over time, they will realize that their money is growing each time they add more funds. When the piggy bank is full, take the money that they have been saving and deposit it into their First Bank Kids Cash Savings Account. After the money is deposited, explain to them that the more money they deposit into their account, the higher their total amount will be.
2. Show them the value of money.
An important part of understanding money is realizing the value of different types of currency. An easy way to help your child understand this is to price different items and have them determine what types of currency need to be used to pay for that item. For example, assume a piece of gum is 10 cents. Explain to your child the worth of a penny, nickel, dime, and quarter and let them determine what coins need to be used to reach 10 cents. Once your child starts understanding the value of the coins and how much they are worth, you can start introducing higher priced items and bills.
Read more on how to Teach Your Children Well: Basic Financial Education
3. Help them understand needs versus wants.
When did your child last say they needed a new toy? Once they start saying they need things, it’s an appropriate time to start teaching them the difference between needs and wants. To your child, they need that new toy, but to you, they want that new toy. A simple way to help them understand the difference between needs and wants is to have them categorize different things into a “needs” category and a “wants” category. Start with a list that combines both needs and wants, such as food, clothing, toys, or a new game, and let your child determine whether they think each thing listed is a need or want. After they’ve categorized each item, go through their lists and explain which items are needs and which items are wants. This can help them understand that needs are things you actually need or use every day, whereas a want is something that you wish for and plan accordingly to save up to buy it.
Teaching your children the basics of money at a young age can help them start developing healthy financial habits and financial responsibility. Our First Bank Kids Cash Savings App can help further their education on concepts like earning money through chores and first jobs, learning currency, setting goals, defining needs versus wants, and saving money. Download it in the app store to get started today!
Click here to find out more about the First Bank Kids Cash Savings App.