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So, if you’ve read my last blog post, you’re on the right track to getting your messaging around beliefs about money down. The next step is to figure out what practical skills your children are learning about money management and how money works. Here are a few basic ideas that can be shared and reinforced overs years to help your child get a strong foundation in the basic concepts.

One of the key ways to reinforce these ideas is to share out loud what you’re doing when it involves money. Involve your child in as many of your banking and paying transactions as possible. Either explain what you’re doing, or have him or her help with the process.

Here is some key information and important skills to share:

Money needs to be stored in a special place to avoid losing it. There is no need to elevate money above other things, though – help your child take care of ALL the things he or she is a steward of, from toys to clothes to food to pets, by storing and caring for things appropriately.

If you find money, big or small, pick it up, return it to its owner if possible, and if you keep it, store it carefully. Remember that you are teaching processes – whether it’s a penny or a twenty.

Start with which coins are worth more than others (age 2+). Later, name the coins, and help your child figure out how many of one kind of coin makes another (ie 2 nickels are the same as a dime, 4 quarters equal a loonie, etc) (age 4+). When at the store, ask which things cost more and which less (age 5+). Money math is a great way for a child to be motivated to learn mental math, and eventually, a child can do basic record keeping and set and track savings goals (age 5+).

Splitting money up from the beginning makes it easier to understand the value of money. My daughter splits all her earned money into thirds. She has a “Save Forever” account, a “Dog Fund”, and spending money. The “Save Forever” money is for something big and long term, and we talk about it all the time. It may be so that she can attend a special university, buy her first home, take a trip to a special destination, or all of these things. Her “Dog Fund” is so that she can have her own dog. Her spending money is shared with charities, used for gifts for friends, and used for her own spending choices.

Take the time to explain how a bank works, and how a credit card works. Draw a big red line on a piece of paper, and set out, or draw a picture of each option. On one side of the line, show your child all the different ways to pay for things WITH YOUR OWN MONEY, and then, on the other side of the line, show your child ways that you can pay for things WITH BORROWED MONEY that you have to pay back. Introduce the concept of interest as soon as your child understands it (5+).

Show your child that the way we spend our money doesn’t just mean WE get something – it has a much bigger effect. The systems that produce the things that we spend money on are supported by our money. If we don’t want to support certain situations or products (child labour, the production of cheap plastic that just ends up in the landfill, unfairly traded goods, etc), then we can choose not to spend money on things produced by those systems. On the other hand, we can support things we believe will make our world better when we spend our money, too (local businesses, eco-friendly products and services, fair trade, organically grown food, etc).

You don’t have to send your child to money school to share these messages – just share what you’re doing, and help them along the way to understand the next idea that they’re developmentally ready for. If you share something, and they don’t get it right away, try again a few months later, and remember to repeat and build on key ideas over years.

Keep your eyes open for my next two blog posts – How to Stop your Kids from Begging for Stuff at the Store, and The Allowance Question.

In the meanwhile, if you haven’t read my post about helping kids develop healthy beliefs about money, check it out!

And please share your experiences with sharing money skills and ideas with your kids below!

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