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9 Simple Lessons to Help Your Children Appreciate Money

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9 Simple Lessons to Help Your Children Appreciate Money

Children need to learn how to save, spend and share money appropriately. Financial planning skills should be instilled at a young age to develop good financial habits that guarantee future success.

The following lessons can best help your child learn how to save, spend and share, more so, help them appreciate money just a little bit more.

Lesson 1: Where does money come from?

First and foremost, you need to explain to a young child about where money comes from.  Where do you think your child thinks money comes from? They might say, the ATM or the bank, because most of the time, children see their parents come back with money or go to these places to get money. Do not let them grow up with this assumption as they might actually believe that “Money does grow on trees”.

These are the things you need to explain:

♣ Currency denominations. Make sure you show them what each looks like.

♣ Explain what these currencies represent i.e. how to get pain in exchange for offering services (work) or investing how you spend it on food, clothes, toys and much more.

Depending on how old your child, you can go into as much detail as possible about how you spend your money on various necessities i.e. pay taxes, mortgages, bills and other necessities.  Note, that you should always be positive when talking about money to your child because children tend to adopt the attitudes their parents have towards certain things.  The aim here is to get them comfortable with money and financial planning.

Lesson 2: The Miracle of Compounded Interest

Compounded interest is considered the most astounding phenomenon by Albert Einstein. Many adults are in the dark about this but you aren’t, so don’t let your child grow up not knowing how KES. 1 a day can grow up to one million shillings at 10% interest rate for 56 years. I have written about this before and you can read more about here. Do not hesitate to draw a chart with your child and explain how money grows over time. Please do not start thinking like skeptical adults that I have encountered here – most people lack the patience and do not want to put in the work to research on various funds that may potentially yield good returns to invest in. Children are more willing to accept and less likely to find a reason as to why it can’t work like most adults do. Get your child excited about saving and investing, as this ‘miracle’ could make them rich!

Lesson 3: Pocket Money As a Teaching Tool

The most effective ways to teach a very young child is to keep lessons as tangible as possible and the most effective ways to do this is through the provision of pocket money or allowance and a piggy bank. With this, you can effectively edify practical lessons on money. It is never too late to educate your child on the ideas of financial planning – saving, spending, and sharing.

It is important to note that, children too are susceptible to similar faults that we make. Just like many of us adults who tire of saving because it takes a very long time and discipline, children need a lot of support here. The most effective way is to have your child make a goal like buy a doll or remote control car at the end of the saving term – ensure that it is not something too pricey that would take ages to attain otherwise it will become too frustrating increasing the likelihood they will give up. Instead, make the goals specific enough, measurable, attainable,  realistic and achievable within a reasonable time frame.

However, even if they come up with a very pricey goal – do not discourage just help them come up with a reasonable plan to achieve it within a reasonable time frame. Goals will give your child the much-needed patience and motivation to save. That is what financial planning is all about.

Lesson 4: Teach them about retirement accounts

It is never too early to start thinking about retirement, but it can be too late to think about retirement. You would not like your child to get odd jobs during the sunset of their lives because they failed to manage their money more wisely. These changes and choices are good for the society as a whole because people who save spend and invest more wisely are much less likely to require a bailout from family and friends. We are the number one influence on our children’s financial behavior and the sooner we start taking advantage of everyday teachable moments, the better off our children will be.

Lesson 5: Teach them to think like owners instead if shoppers

Owners aren’t usually swept away with the latest shopping craze and appreciate money a lot more. I cannot recommend the exact amount that is appropriate to provide as an allowance for your children, however, ensure that these allowances have purpose and use. For instance, children can be responsible to purchase whatever they need like the latest gadgets or replace items they lost. Buyer’s remorse is a tough lesson that can only be learned through experience. Over time, children will learn to distinguish between wants and needs, learning to be responsible shoppers by not being carried away, takes time. Let your child make mistakes, we all spend money on things we wish we could return to the store later. It is through these lessons learned at an early age to build money character by imparting owners’ mentality instead of shoppers.

Lesson 6: Teach them to use credit cards responsibility

Children need to learn that we all have a limited amount of money to buy all the things we need and want. Setting limits and helping your child understand the difference between needs and wants are key lessons to learn at an early age. Credit cards eliminate limits and if not used wisely, children may adopt bad money habits of spending what they do not have. A great way to start is to explain to your child how the family makes buying decisions. When you are shopping with your child, ask aloud so they may hear – “do I need this?, Would it cost less someplace else? Can I borrow it instead? Or perhaps there is a similar item on the shelf that is selling at a discount”. Talk to them about how you decide what to buy and what to pass up. Which is more an important biscuit or fresh fruits?

Lesson 7: Teach them to go for their dreams

Teach them to pursue their dream relentlessly and to aspire for the universe if possible. The sky has not always been the limit.

Lesson 8: Teach them to share and care for others

Helping others has its own inherent value as it offers the one that is giving happiness. It also connects you to the fate of others. But it is not all about helping the less fortunate. Your child’s school needs volunteers and financial support sometimes. Volunteering teaches our kids the importance of responsibility and teamwork. Therefore, share with your children what you do to help others and why. Ensure that you involve them in those activities. And ask them about the things they would like to do to help others and help them achieve this end.

Lesson 9: Use the Internet to teach your kids about money

The internet is a great tool with vast information on personal finance and financial planning. Introduce your child to financial planning tools for kids such as Kids Finance or Prosperity4Kids – just to mention a few. Improved financial literacy improves financial planning and decision making. More informed choices lead to better choices and more satisfaction with those choices. All these things are good for the entire society as a whole.


A lot of us have learned most these lessons through experience and having some basic common sense – financial planning isn’t really part of our core curriculum. But not all of us have these lessons sunk as such, ensure, you pass onto your child good money habits that will ultimately help them in life.

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