Parents commonly struggle with how to talk to their children about money. Teaching your child about money is as simple as answering your child’s money questions appropriately for your child’s age and providing opportunities for your child to learn money skills.
What children understand about money, and when
5- to 6-year-olds: By this age, children learn that one has to pay money for something before taking it out of the store; and that the money is now gone. Five to six-year-olds see the number of coins having more value than the actual value of the coin; for example, four pennies is worth more than one nickel.
7-year-olds: Children start to learn the actual value of money and that not all money is worth the same amount by age seven. They can now learn to match the value of money with the price of an item.
8-year-olds: By age eight, children start to understand the value of saving money in order to have more for the future.
How to teach your child about money
In today’s world children see people use credit and debit cards to pay for things, so money can be even more abstract to understand. For children to learn about and understand money they need to see it, touch it and use it.
Here as some fun, easy ways to teach your child about money:
Categorize and sort: Provide your child a pile of coins and have him or her categorize the coins by pennies, nickels, dimes and quarters. Take this a step further and have your child count out 25 pennies to equal the value of a quarter, etc.
Talk while you shop: When paying for something, say, “This costs 25 cents so I will use a quarter to pay for it.”
Money jars: Provide your child three clear jars to collect their money in; a spending jar, a savings jar, and a donation jar. Guide your child in putting money in each jar and explain how one can use money in these ways.
Allowances: By age five, providing your child with an allowance can help your child learn about budgeting. Your child can put their money in the money jars discussed above. When your child buys something with their spending money, your child learns that when you spend money it is gone.
Board games: Various board games are another fun way to teach children money concepts.
Teaching your child about money is a great way to encourage math skills and responsibilities. It is never too early or late to teach your child about money.
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