Many parents focus on teaching their children the three Rs (Reading, wRiting and 'aRithmetic), but one thing they often overlook is teaching young children good financial habits.
Recent research has shown that when it comes to effecting real change in financial attitudes and decision-making, it's best to talk about money early and often. A study published in the journal of Management Science in 2014 found that whatever someone learns in an hour of financial education wears off after just five months, according to researchers at the University of Colorado, Boulder.
Ms Jaclyn Smith, Assistant Curriculum Manager with Learning Vision, Busy Bees Singapore, agrees. "It's best to reinforce basic money concepts through daily social interactions in meaningful situations of familiar environments," she says. "It is neever too early to start to inculcate positive attitudes towards money and develop good financial habits in young children -- in fact, it may be easier to instil good habits when taught earlier in life."
What's more, equipping children with financial literacy goes beyond educating them about the basic concept of money and knowledge on how to manage it. "In the young, it is more important to encourage a healthy attitude about money and develop healthy behaviours towards it. Embedding attitudes and values such as frugality, dilligence and gratefulness may be more important to empower them in many situations they will encounter in life," says Ms Smith.
Grasping abstract financial concepts may be difficult at a young age, so think about how to incorporate such ideas into your child's life through role play, activities and games. "Studies show that some of the best ways to promote financial literacy in young children is to create experiences that introduce three topics -- spend, save and share," suggests Ms Smith.
The American non-profit organization Jump$tart Coalition for Personal Financial Literacy suggests the following techniques for kindergarten-aged children:
SPENDDiscuss potential household chores that may be an appropriate way to earn money (e.g. sweeping the floor, feeding the pets). List occasions when people may receive cash as gifts.
SAVEChoose how to spend personal funds. Start saving for a specific goal (of your child's choice).
SHAREInstead of spending money, trade a personal item for something else. Share an experience with your child about a decision not to spend money. Encourage your child to pick a charity and raise funds for it.
There are so many more ways of introducing and instilling good financial habits. Here are more fun games and activities to try:
GO ON A GROCERY SHOPPING MISSION
"Children always enjoy it when they get to participate in 'adult business'," says Ms Smith. "They feel a great sense of responsibility and pride when they are recognised as valued contributors and have an important task or mission to complete."
Make a shopping list of items needed to prepare a family meal. If appropriate, tell your child what the budget is and stick to it. At the store, talk about the cost of various items, and which cost more. Discuss the items you would choose, and why.
This activity is a great way to introduce the concepts of budget and financial planning to children. It also helps your child understand that you cannot get what you want, all the time.
"Involving children in the shopping process is a great way to introduce how different items have different costs. Parents can draw children's attention to the price tag, discuss the quantity of items to purchase and have on-going dialogues on whether items are a need or a want given the budget they have to work within," says Ms Smith. "It creates meaningful platforms for parents to model and demonstrate various elements of financial literacy, and is a great way to teach negotiation skills."
These lessons can also be reinforced through a pretend play shopping experience at home.
LEARN TO BE A CASHIER
Start off by introducing dollar notes and coins and talking about the different denominations. Invite your child to sort, count or match different coins or dollar notes.
Once your child is familiar with coins and notes, it's time to teach him the concept of change. As with most things in life, there is more than one way to do so, but the most effective way is known as "counting up". Show your child how to count from the amount spent to the amount tendered. For example, if you need change from $1 for an item that costs 65 centrs, count (with coins) from 65 centrs, to 70 cents (add a 5 cent coin), to 80 cents (add a 10 cent coin), to $1 (add a 20 cent coin). The amount of change needed is the total amount of coins added (5+10+20).
Once your child gets the idea, let him practice in real life. He can count out money to pay for an item and check the amount of change received. This activity is also a great way to reinforce number skills such as adding and subtracting.
SHARING IS CARING
Money games can be fun but they mostly focus on spending and saving money, so don't neglect to teach your child about sharing as well. Get them into the habit of sharing early, says Ms Smith. "One of the best ways to start such a habit in young children is to model the behaviour," she advises. "Invite and involve children to participate in acts of sharing with you. Make it a habit to talk about things which they are thankful for."
"Such dialogues promote a sense of gratitude in our children. Studies have shown that children who are more grateful are more likely to grow up to become happy children. When children feel grateful for what they have and who they are, they become willing to share."