Do you know the best way to talk about money with children?

To address the topic of money with children, it’s crucial to explain in a clear and direct manner, introducing concepts such as quantity, price, and value. Financially educating children is a valuable gift, empowering them to handle financial matters consciously and responsibly.

Here are 10 tips on how to talk to children about money, a challenge for many parents and educators. However, it’s fundamental to teach children the value of money and how to use it consciously and responsibly from an early age.

1. Start early by explaining the use of money: Don’t wait until children grow up to address the topic of money. Begin the conversation as soon as they are old enough to understand exchange and choice.

• For children aged 2 to 5, introduce the concept of saving through a piggy bank, setting goals such as saving to buy an ice cream.
• With children aged 6 to 8, teach the value of things by showing the prices of food and toys. Associate notes and coins with specific items (for example, a $2 bill may be equivalent to an ice cream). Create playful situations, such as a pretend market at home, to teach about values.
• For children aged 9 to 12, use pocket money as a tool to teach the value of money. Explain the difference between wanting and needing, introducing pocket money as a conscious way to manage money. Assist in defining financial priorities.

2. Use real-life examples to teach about money. Take advantage of everyday situations, such as going to the supermarket, paying bills, or saving for a goal, to explain to children how money is earned, spent, and saved.

• During supermarket shopping, show the prices of products and explain how money is used to acquire food and essential items, demonstrating family financial planning.
• Involve children in spending decisions during outings, such as going to the movies or the park. Ask if they prefer to buy an immediate snack or save for something bigger in the future.
• If they receive pocket money, use it to teach budgeting. Help them plan the use of money, dividing it between savings, spending, and donations.

3. Establish pocket money as a way to teach money management. Adapted to the child’s age and maturity, set clear rules about the use of money.

• Teach them to divide pocket money into categories, such as savings, intended to save for specific goals, such as buying a toy or taking a trip.

4. Encourage saving for the future, one of the essential lessons to teach children. Help them set short, medium, and long-term goals, showing how to set aside part of the pocket money or other income to achieve them.

• Set saving goals together, such as buying a toy, going on a family trip, or even for college in the future.
• Celebrate the achievement of these goals, encouraging the continuation of the saving practice.
• Lead by example personally, showing your own saving and investment practices, so they learn from your behavior.

5. Teach about conscious consumption, a crucial lesson for children. Show how excessive and impulsive consumption can affect the environment, society, and financial health.

• Explain the difference between basic needs and desires, helping children discern between essential and impulsive purchases.
• Teach about consumer rights and duties, and how to avoid frauds and scams.
• Highlight the importance of reusing items whenever possible and recycling materials such as paper, plastic, and glass, demonstrating how small actions make a difference.
• Be a model of conscious consumption, as children learn a lot by observing adults. By making conscious choices, they will follow the example.

6. Open a dialogue about the values behind financial decisions. When talking about money, seize the opportunity to discuss the values important to you and your family, such as honesty, generosity, solidarity, and gratitude, and how these values relate to the use of money.

• Teach that honesty is fundamental and exemplify how telling the truth, even in difficult situations, is an essential value. Explain that everyone has responsibilities, whether at home, school, or in the community, including caring for the environment and fulfilling obligations.
• Promote acceptance of differences and non-judgment of others, demonstrating how diversity enriches our society. Encourage gratitude for the good things in life to cultivate a positive attitude towards money.

7. Be a positive example of financial behavior for children, as they learn more from observing than just listening. Share your experiences, successes, and financial failures, demonstrating how you plan, control, and invest your money.

• Demonstrate empathy and understanding for others’ feelings, regardless of their economic levels. Show how to treat people with kindness and respect their opinions, cultures, and differences.
• Fulfill your financial obligations and commitments, highlighting the importance of responsibility in economic life. Emphasize the importance of giving, facing challenges with determination, and show that perseverance leads to success.

8. Use playful resources to make teaching about money fun and interesting. Resort to games, books, movies, and educational cartoons that address the theme in an engaging way.

• Explore board games or apps that teach about money, where children can earn or lose money based on their choices.
• Set up an imaginary shop at home, allowing children to “buy” and “sell” using play money, which helps them understand prices and change.
• Encourage creativity and critical thinking by asking children to draw or write about what they would do with a sum of money.
• Enhance learning with songs or choreographies about financial topics, making the teaching process more dynamic and fun through music and dance.

Teaching the difference between needs and wants is crucial for children’s financial development.

Needs are essential items for our survival and well-being, such as food, water, clothing, shelter, and healthcare. They are what we really need to live.

Wants are things we desire but are not essential for our survival. They can include toys, electronics, fashionable clothes, trips, and other things that bring us pleasure but are not indispensable.

During everyday activities, highlight the difference between needs and wants. For example, at the supermarket, show that food is a need, while a toy is a want.

10. Emphasize the importance of saving as a fundamental practice:

• Financial security: Having savings provides a safety net to deal with unforeseen events, such as unexpected medical expenses or job loss, offering peace of mind and stability.
• Goal achievement: Saving enables the realization of goals, such as buying a car, traveling, taking courses, or acquiring a home, turning dreams into reality.
• Independence and freedom: Having their own savings means not relying solely on others, providing independence, freedom, and financial autonomy.
• Future preparedness: Saving is the first step towards future investments. Over time, savings can grow through smart investments, preparing for financial future.
• Avoiding indebtedness: By saving, the need to resort to loans or credit cards to cover expenses is reduced, decreasing the risk of excessive debt.

It’s important to convey to children the notion of preparing for the future and the importance of learning to save from an early age, turning this practice into something accessible and rewarding.