How to Teach Your Kids About Money When You Don't Understand It Yourself

I was talking to a lady this week who was worried about what she describes as a spending addiction. Her husband is getting really angry with her over her spending. She is also worried that she is not setting her six-year-old a good example. She does not know what to do. I suggested that a first step could be for her to learn whilst teaching her son. So, this is what she is doing...

Money is an essential part of life, yet many of us feel overwhelmed by it. The good news is you don’t need to be a financial expert to teach your children the basics of money management. By learning together, you can make the process enjoyable and educational for both of you. Here are some simple and fun ways to help your kids understand money, even if you’re still figuring it out yourself.

1. Start with the Basics

Begin by explaining what money is and why it’s important. I know that we are nearly all digital nowadays but to begin use real coins and notes to show them different denominations. Play a game where you identify and count various coins and notes, which can be a fun and practical way to get them familiar with money.

2. Use Everyday Experiences

Incorporate money lessons into daily activities. When you go shopping, show your kids how to compare prices, read labels, and make choices based on value rather than just cost. Give them a small amount of money to spend on a treat and guide them through the decision-making process.

3. Create a Savings Jar

Introduce the concept of saving by creating a savings jar. Encourage your children to save a portion of any money they receive, whether it’s pocket money or birthday gifts. Watching the jar fill up over time will help them understand the value of saving for future goals.? Encourage them to make their own savings jar by washing up an old jam jar or similar and then simply sticking a label on the side.?? Make is special and valuable to them by telling them that saving now for their future will give them the best chance of being rich when they need to be!?? Explain the concept of compound interest – try this video if you are not sure how to explain it…

https://bit.ly/compoundlisa

4. Set Up a Simple Budget

Teach your kids the basics of budgeting by setting up a simple budget together. List their income (pocket money, gifts, etc.) and expenses (sweets, toys, outings). Show them how to allocate money for different purposes and the importance of not spending more than they have.

5. Play Shops

Playing shops is a fantastic and imaginative way to teach children about money. I used to live next door to a junk yard, and the children there, along with my sister, would set up tables and sell junk to each other with the currency being berries, which we kept in an old tin can. You can replicate this by setting up a mini shop at home with toys or household items. Use play money or even real coins to make it more realistic. This game teaches children about transactions, making change, and the value of different items.

6. Use Stories and Games

There are many books and games designed to teach children about money. Stories with characters who save, spend wisely, and even make mistakes can be great teaching tools. Try Grandpa’s Fortune Fables by Will Rainey ????♂? .? You can also see a series of programmes I made with Will on my YouTube Channel - https://www.youtube.com/@fannysnaithcoach

Playing board games like Monopoly can also introduce financial concepts in a fun and engaging way.? Another totally brilliant game is Cashflow for Kids.? Again – this helps us to be better with money too.

?7. Open a Bank Account

If your children are old enough, consider opening a savings account for them. This can be an exciting milestone and a practical way to teach them about banking, interest, and the importance of keeping their money safe. Make regular trips to the bank to deposit their savings and watch it grow.? I remember going to the Nationwide Building Society in Cheltenham High Street with Connie and Wren where they had a video interview with the manager.? It made an occasion of it and helped underline the importance of money to them.

8. Lead by Example

Children learn a lot by observing their parents. Try to set a good example by managing your money wisely. If you’re comfortable, involve them in some of your financial decisions, like planning a family budget or saving for a holiday. This will help them see how money management works in real life.? Don’t be afraid to start early.? It is never too early to pique interest.? Show them how coins translate into digital displays on your apps for example.? Avoid saying “We can’t afford it” by changing it to “we are not choosing to spend our money this way right now.”? Language is very important – listen to how you talk about money and therefore what you are teaching them.

9. Teach the Difference Between Needs and Wants

Help your kids distinguish between needs and wants. Explain that needs are essentials like food, clothing, and shelter, while wants are things that are nice to have but not necessary. This understanding can help them prioritise their spending and make more mindful choices.? You can show them even better by explaining your decision making.?? Tell them how you made a decision to buy or not to buy something and the reasons behind it.

10. Encourage Giving

Teach your children about the importance of giving. Set aside a portion of their money for donations to a charity or a cause they care about. This not only helps them understand the value of money but also instils a sense of empathy and community responsibility.? Encourage gratitude too.? Being grateful for what we have is often overlooked when we live in a society where more is always better and we practice “never enoughness” by constantly wanting more.? Again watch the habits and ways you? are passing on to your children.

11. Use Technology Wisely

There are many apps and online resources designed to teach children about money. Look for age-appropriate tools that offer interactive lessons and games. These can be a fun way to reinforce the concepts you’re teaching at home.? Starling Bank - Kite, GoHenry , HyperJar and NatWest Rooster Money are all popular.

12. Learn Together

Don’t be afraid to admit if you don’t know something. Use this as an opportunity to learn together. There are plenty of resources available, from online courses to library books, that can help both you and your children build financial literacy. Learning alongside your kids shows them that it’s okay not to have all the answers and that seeking knowledge is a lifelong process.? Again I have a series of videos on how to talk to your children about money on my YouTube channel - https://www.youtube.com/@fannysnaithcoach.? Please do hit subscribe if you choose to watch – I would very much appreciate it.

13. Celebrate Milestones

Celebrate your children’s financial milestones, whether it’s saving a certain amount, making a wise purchase, or donating to a cause. Acknowledging their efforts and achievements will motivate them to continue learning and practising good money habits.

So.. to wrap up…

Teaching your kids about money doesn’t have to be daunting. By starting with simple concepts, using everyday experiences, and learning together, you can help them build a solid foundation for financial literacy. Remember, the goal is to make learning about money fun and practical. With patience and creativity, you can guide your children towards a healthy relationship with money, even as you navigate your own financial journey. Happy learning!

If you would like more of this type of post please do let me know.

https://www.youtube.com/@fannysnaithcoach

www.fannysnaith.com