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Your 5-year-old never lets up on the questions! What, how and why, all the time! You can satisfy some of their curiosity and help them learn about the world of money at the same time! Teach your 5-year-old these 5 important things about money and help them develop good money habits early!
1. What money is
Help your child become familiar with the money world by teaching them what money is.
To do:
- Show your child coins and notes, and explain which ones have higher values (for example, R20 versus R10), using their counting skills.
- Show your child your wallet and bank account so they understand where money is kept, and that it should always be in a safe place.
2. What money is used for
When your child knows what money is, explain to them what it is used for. For example, money is used to buy things, such as food, toys, tvs, clothes and cars.
To do:
- Take your 5-year-old to the shop and show them how you buy food and other items using the money in your wallet or bank account.
- Explain that you cannot buy everything as you can only spend the money you have.
- Give your child some money and let them buy an item. Make sure they look at the price so they know if they have enough money to pay for the item or if they need to choose a cheaper item.
3. How pocket money works
Your 5-year-old needs to know when they get pocket money and how much, and what they can do with it. This is a good introduction to budgeting, spending and saving – on a small scale!
To do:
- Explain to your child that money comes from somewhere, for example you work and earn a salary. They get money in the form of pocket money or an allowance from you every week.
- Walk your child through some of the things they can do with their pocket money, such as spend it on a sweet or toy, and/or save some, and/or share the money by donating to a worthy cause! A good idea is to have 3 jars that they can put their pocket money into depending on what they want to do with it, namely spend, save or share.
You can read more about pocket money for kids in this blog.
4. Why some money should be saved
Your curious 5-year-old will see that sometimes the money they have is not enough to buy what they want. This is their first encounter with the world of saving and all it can offer!
To do:
- Explain how expensive items can be bought when money is saved up over time. Share how you save for things you cannot afford right now but want in the future, such as a new car.
- Encourage your child to start saving. Kids are visual, so piggy banks are ideally suited for putting some money away each week, but opening a bank account for your child isn’t a bad idea either. Relatives can add money to the account on birthdays and other special occasions!
- Help your child decide on something to save for, not too far in the future, and let them see the money grow until they have enough to buy that new toy they have their eye on!
5. You can have fun without money
You are teaching your child about money and how important and useful it is – how about letting them know that money isn’t always required for fun? This can help your child learn that there are other important things in life, even though money is pretty high up there.
To do:
- Take a walk in the park or play a backyard game of soccer or netball.
- Spend time with friends and family without spending money.
Have some money fun
Make learning about money fun and your child will want to learn more! Read financial stories suitable for kids and play age-appropriate money games, for example Junior Monopoly board and app games, once they are a little older. Also, consider financial education courses for you to build your money skills that you can share with your child as they grow older! You can visit Truth About Money for free financial education courses.
Keep the learning going!
As your child grows and learns about money, share more money values and money management tips with them. Encourage them to become financially savvy and save for their goals so they can one day be financially free! These are big dreams for a 5-year-old but dreams well worth pursuing!