Gaining financial literacy at a young age can set your little one's economic success long into the future. It offers children an opportunity to learn about and be engaged with money in an inclusive and empowering manner.
Dina Shoman is an international banking veteran, serial financial literacy entrepreneur, and the Co-Founder of Verity the App and she shares her expertise on the subject of Financial Literacy!
It may come as a surprise to few, but children can start learning basic money concepts from the age of 3 and their behaviours and attitudes about money are set between the ages of 7-9 years!
Statistics and research on the subject support that people who have a strong financial foundation in their young days grow up to be individuals who make informed financial decisions.
Every parent wants the best for their child, and teaching about spending money the right way is as important as teaching good manners and inculcating the right habits.
At this age, children can’t really understand what money means, but why not start focusing on counting numbers? Use objects to help! You can also try using toy cashier registers with play money for fun. Even if they can’t understand the concept of money, they will get used to the motion and idea that we need to exchange money to buy things.
This is a key age to start teaching them the difference between Needs (things we need to live and survive, like food, clothes, shelter, water, etc…) and Wants (nice to haves but not essential for our survival)! To start, you can have them choose between two pleasant activities or (wants). For example:
What would you choose?
- Go to the beach OR go to the park?
- Eat ice cream OR eat candy?
- Watch your iPad / TV OR play with your favourite toy?
You can make it even funnier by including crazy options! Here are some examples:
- Swim in a pool of marshmallows OR swim in a pool of gummy bears?
- Have a pet giraffe or have a pet elephant?
- Fly a helicopter or drive a fire truck?
- Be a unicorn or be a dolphin?
Once they’ve gotten used to that, you can introduce the concept of Needs to them by sharing they are things we have to have to survive. Clothes, water, shelter, food, etc… are all examples. See our activity for the month with different images of Needs and Wants and have them sort the cards according to whether they think they are a Need or Want. When you watch tv or read stories, find opportunities to identify Needs and Wants. Emphasise that it’s okay to buy things that are Wants as long as we meet our Needs first and we have a budget for them.
Now you can introduce the idea of “Saving” to them and how sometimes we need to wait to get what we want. Think of things they want to buy and help them start saving towards it! To help, place a picture on a paper and create a thermometer goal tracker so they can visually see how close they are to achieve their goal.
You can do so many other things to help them learn all about money, including playing pretend restaurant or store, and establishing salaries and costs of products and services. This will help them understand that we can earn money through jobs, and that things cost money.
For this age, introduce Lifestyles and Goals! Help them dream BIG as they imagine their future: what do they want to be? What kind of house do they want? Where would they live? Do they have pets? Do they want a bike or a car? Ask them to draw themselves in the future with everything they want to have and be. Share that to have the lifestyle we want, we need to set goals – some are big goals, but we can create smaller goals to get there.
For the 8 and 9-year-olds, you can share that we can make decisions based on the goals we have. Maybe we are saving for basketball camp and all of a sudden new Kicks come out that are popular with all our friends. That doesn’t mean we go and buy them – we need to focus on our goals and maybe create additional goals for things we want.
Now ask them to think of something they would really like in the near future. Think of smaller goals they can set to get there! For example, they want to become a professional basketball player. Some steps might include: Saving to buy clothes, shoes, a ball, and a hoop. Maybe saving for lessons and for joining tournaments. Another could be basketball camp.
Kids this age should understand how banks work, and what alternatives there are. Traditional banks and apps such as Verity are safe places to keep the money that you have saved. If they are 8 and older (or even if they’re younger and you feel they’re ready), open a Verity account for them and get them their own prepaid VISA debit card so you can start helping them save and spend their money smartly.
You can also have conversations about how to choose the best jobs based on their strengths and interest. Have them play reporter and interview people with different professions! Here are some questions they can use:
- What did you want to be when you grew up?
- What do you like about the lifestyle you have now?
- What kind of job do you have?
- Do you like/dislike your job and why?
- Would you do anything differently?
- Do you have any advice for me as I think of what jobs and lifestyles I want?
Once they are done, help them create a collage of the type of career they want and the type of lifestyle!
Pro tip: Create Saving Goals on the Verity App for every goal they have – that way, both you and them can see how far they have come along.
Find age-appropriate books that will equip you to teach kids about money, its importance, and how one can learn to manage it in our gift shop!