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How to teach your kids about the value of money

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As money has by and large become an abstract and non-physical entity, it has never been more important to teach your kids about managing their finances. Showing kids how to save, spend and budget is critical for personal development as it teaches the benefits of delayed gratification and empowers them through a semblance of financial independence. The following is a list of ways you can teach your kids about money and finances.

Physical money

In our high tech world of internet banking, credit cards and online shopping, kids rarely see products being bought and sold using physical cash like coins and notes. This can make it harder for them to get a feel for what things cost. Not handling real money can make it invisible and abstract to the point of being viewed as a limitless resource rather than a set amount of money in the family bank account. Talking to your kids about cash, showing them real money and letting them physically purchase items on their own will make money more real to them. The ATM is a great place to teach your kids about cash, you can explain that it is where the money you have worked hard for and saved up is stored. It is important to clarify that an ATM is not just a magic hole in the wall that dispenses cash

Shopping online

Anyone who has kids will know that they are extremely tech savvy from a very early age, especially when it comes to games and mobile devices. Why not use this innate gravitation towards tech as a tool for learning about finances? If, for example, your child is looking to buy a new toy, you can encourage them to find the best deal on the web by comparing prices online. This is a great opportunity to teach them about both the advantages and potential risks of online shopping. Emphasize that just because something is online, it does not mean that it is trustworthy or authentic. Give examples of scam mails, and teach them about data protection. For example, if you get an email or popup that asks you for your bank account number, they can be sure it is a scam as your bank would never ask for this information. Online shopping scams are also common, so make sure that they are aware that if something is too good to be true, it probably is.


When teaching your kids about finances, it is important to clarify that services have their own cost, just like goods. When you receive bills by email or through the post show them to your kids and go through the main aspects of the bill. If, for example, it is an electric bill, show them that there is a price for one unit of energy and that the total depends on the electric consumption for the previous month. You may even explain that you earn money for each hour spent at work, and calculate how long you had to work in order to pay a specific bill. This will not only help them understand how time at work is connected to making money, but can also make them more aware of the importance of saving energy by turning lights and applications off when not in use.


Encourage your children to take control of their own finances and write out their own budgets. Start by being consistent yourself; always give them pocket money on the same day and teach them to track where their money goes by jotting down expenditures. Some difficult moments are to be expected, as they will doubtless sometimes spend all of their pocket money immediately and start bargaining for more. This is why it is crucial to agree from the start what you will pay for and what they need to buy on their own dime. As they get older, be prepared to provide an occasional loan to be repaid on an agreed upon date. Depending on the amount in question, you might even use the opportunity for a hands-on lesson in interest rates.

Teach your kids to be inquisitive about money, what things cost and how to save up for things that they want. Learning the value of money and developing financial skills at an early age will prepare your child for financial challenges they will face later on in life. It all boils down to giving them the knowledge and confidence to tell the difference between good and bad financial options.

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