Teaching children about money management is really important, but so is having fun while learning life lessons. Here are 5 ways to help you teach your kids about money management while having fun at the same time:
1. Offer Opportunities to Work for Money
You can create opportunities for your children to work for fake money, as well as opportunities to work for real money:
- Fake Money
Take everyday household tasks already assigned to your children and award them fake paper money or plastic coins for doing the tasks well. You could also award them fake money for helping without being asked, treating each other nicely, being patient, etc. Tell your children to keep all of the money in a safe place. The key to awarding your children fake money is to pair this with another activity that allows them to spend the fake money (see ideas below) and most importantly to learn more about money management. In order for these activities to be effective, make sure you convey to your children that earning fake money is part of a special occasion, not something they should start expecting for doing their part.
- Real Money
Think of tasks or projects that you would like help with that are outside of the normal chore assignments in your home. Offer these opportunities to your children as a way to earn money. Again, the key is to reinforce that chores are required without pay, but sometimes you will offer special occasions where they can choose to do extra work to earn money. Be sure to notify them upfront of the terms attached to the money they will make. For example, you might tell the child that the task will earn them $4 and half of the money will be set aside for savings and half can be used any way they wish.
2. Set Up a Store
Take household items or toys and attach price tags. Give your children plastic coins or fake paper money (or tie this in with the ideas above). Tell your children that you are going to play a game called grocery store, clothing store, book store, or whatever applies to the items you have chosen. Tell them they can use their fake money to choose what they want to buy. This may work best if you also have some surprise new items such as simple treats or items they love from the dollar store to tempt them. You can choose any strategy you like for pricing such as having books be a lot cheaper than treats, etc. Help them learn basic principles of buying such as how to get the most for their money, letting them be accountable once the purchase is finalized, etc.
You can spice up this exercise by letting the children make up identities by coming up with a new name, wearing costume clothes, and deciding their own backstory. This incorporates more imagination into the process, while still learning basics about spending money. Making the whole store pretend will also help the children understand that all items involved in the store need to be put away in their normal places after you are done with the activity.
3. Set Up a Restaurant
Use a normal meal as an opportunity to teach your kids about money. Have the children wait to be seated. Take them to their table and present them with simple menus with prices attached. Let them choose what they eat and drink. Gently guide them in calculating whether they have enough fake money to pay for the meal and teach them about tipping.
Once your children get the hang of how this process works, take turns trading places at future meals. For example, an older child can create menus offering simple foods to earn fake money from the other children and from you. Younger children can take turns helping as the waiter or waitress and split tips with the cook.
4. Set Up a Bank
Think about the normal processes you go through at the bank and recreate these experiences at home. Let your children pretend setting up an account and making deposits with fake money. Make fake checkbooks and let the kids pay for other activities in your home with fake checks. Help them learn how writing checks connects to the money in their account.
Having a pretend bank is also a great way to teach your children about the importance of saving money. Let your children pretend setting up a fake savings account with either real or fake money. This will be especially effective if you start with a savings goal that can be realized soon and is very important to your child. For example, if your daughter wants a new stuffed animal, help her save for it. Once your children get experience saving for small goals, help them set up a real savings account to start saving real money for college.
5. Turn Real Life Scenarios into Role Play Games
Think about real life scenarios involving money. You can recreate the circumstances and accompanying consequences at home. I contacted Stewart Hart at Gravitate Financial and asked him to tell me about a personal experience where debt ruined someone’s life. Surprisingly, his answer was personal instead of professional in nature:
“I have a friend who had a very good job making a lot of money. He thought this job would last forever so he purchased a lot of toys, ran up his credit cards and maxed himself out. The company he worked for ended up going out of business and he had no other way to pay for all that he had purchased. He ended up losing all his toys, his house and most importantly his wife because the stress of it all was too much. He’s now living with his parents and basically starting all over.”
His story is not unique. I am sure you have witnessed similar situations yourself. This is a real story that you can use to teach your children about debt. Telling your children stories is helpful, but helping them live the stories in a safe pretend environment will leave a more lasting impression. You can do this through role play games or simple games you make up using cards or dice.
Make believe activities provide a great way to let your kids make classic mistakes with money, as long as you are close by to help them learn that the life lesson involved is very real. So get creative, gather your kids, and start having fun while learning about money management!