- Teaching kids about sales tax can help avoid disappointment.
- Financial literacy can be fun for the entire family with these games.
- Learn how to get creative while setting financial goals.
School is out, and the summer is here, but the learning is not over yet! Each day is a new opportunity to teach skills, including the basics of financial literacy.
Whether it is specific money games or spontaneous lessons while running errands, there are plenty of opportunities for teaching simple math and money matters to kids.
This article discusses five kid-friendly activities you can try that promote financial literacy.
1. Play money games
Many kids learn best by doing. For this reason, games are a terrific way to teach your children about money and disguise what they may otherwise consider boring. Thankfully, there are many games and activities available to try as a family. These are just a few examples; however, there are many great money games for all ages.
At-home learning activities
A simple game is to play “shop” or “restaurant” involving bills and coins. You can use real money or play money to illustrate how to pay for goods and services. You can also help your child match the cash to the name or value. After a while, you can work on the simple math and have your kids trade four quatres for a dollar or two nickels for a dime and other value games.
Online money games or apps
Whether you have an iPhone or an Android, the list of apps to download is endless. There is Learning Money with Leo, an app designed by the Royal Bank of Canada to teach children aged three to six about the value of money. Peter Pig’s Money Counter, a web-based game by Visa, instructs kids aged five to eight with practical money skills. Gamification can help children and adults stay entertained while learning.
Of course, there are always the classics like Monopoly and The Game of Life. These games are a little more advanced but are fun for the entire family.
2. Buy with a budget
Now and then, your kids may come into some cash they can call their own. Perhaps they got some money for their birthday, a holiday, from the tooth fairy, or their allowance. When your child has some pocket change, help them find something they can afford.
If your child chooses an item that costs more than what they have, you can give them the option of saving up for the item. You can also teach them how to look at the price tag and determine what they can afford right away. This activity can be a lesson in budgeting and planning.
There is also the opportunity to bring up taxes. Your child might think they can afford something based on the price tag, but they need to pay taxes on top of the sticker price, as you know. If you can, teach them about the tax rates in your province or territory and figure out the total cost of an item with tax. In Ontario, for example, the Harmonized Sales Tax rate is 13%. Let’s say the thing your child wishes to purchase is $12.00. Show them how to multiply the price tag ($12.00) by the tax (1.13) to get the total value of $13.56.
3. Start saving
Part of the budgeting process is saving. After all, managing money is about planning for the future and enjoying what you have, which can sometimes be a tricky balance.
The important concept to get across is how to allocate earned money. A portion of the funds will go toward spending and another will go toward saving. To mimic the bank, provide your child with two distinct piggy banks (chequing and savings).
When it comes time to give your child their allowance, make sure the cash can be separated into two portions, whether it’s an equal amount or another value that you decide. Have your little one deposit the money into each “account” and track how much they have. Add “interest” into the “savings” piggy bank and explain how that money is growing.
At some point, you will want to help your children open their own savings account. The best youth accounts have both chequing and savings options. Eventually, you can deposit the money into their account and continue with the activity.
4. Set financial goals
It’s never too early to think about financial goals and start working toward them. Ask your kids about the big goals they might have. They might say that they want to buy a new bike, save for a trip with their friends or create a university fund - kids can surprise you!
Whatever it is your child wants to save for, be supportive of their goal. The idea is to teach them how to work toward achieving it. Financial goals go hand in hand with saving, so help your child determine how much they need to save periodically. To make it more fun, you can get a large poster board and draw an outline of the item. Divide the image into increments and assign a monetary value to each section. As your child saves, they can colour in the amount they have. They will also see how much more they need to save. Once the image is coloured in, you can take them to buy their goal.
5. Learn on the go with family and friends
As you’ve probably realized, kids are pretty observant. Teaching your kids about earning and spending can be as simple as giving them a chance to observe the process.
There are ample opportunities to do this even as you run to the supermarket, plan a vacation, or send them off on a fun day with friends. For earning, you could host a garage sale, set up a lemonade stand, or work together to raise money for a charity. These settings can be an excellent opportunity for your child to experience the process of working and visually seeing how much money they earn.
On the contrary, take your children with you when you go to the grocery store, mall, or errands. They’ll learn a lot from you simply by observing your spending habits. If you stop for parking, have them help you feed the metre. If you need a drink, show them the value on the vending machine and get them to count out the coins you will need. If you send them on an outing with their favourite aunt, give them a few bucks for ice cream and then follow up on how they used the money at the end of the day. If they have an amount left over, suggest they save it. Instilling these positive financial habits early on can make them second nature in adulthood.
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