Children learn skills in many different ways. This is important when thinking about teaching them about money. Observing adults as they spend is one way that they begin learning. If a parent is aware of this, they can begin instilling small lessons in their errands.
Many children think that if adults run out of money, they just go to an ATM machine to “find” more or that the adult can just use a credit card in place of possessing money. It is important that children learn that both of these need to be used responsibly and that there should always be money, either in the account, or to pay off the credit company, before they are used. This can be done by setting up a “bank” at home, then allow the children to deposit money from their allowance. When they would like to take some money out, a pretend ATM could be set up, with a parent behind with the children’s money at hand. The children would enter the amount they would like and if they have that much in the account, the ATM will allow them to have it. If they do not have enough money, they will have to wait until they can deposit more.
The previous activity can also be used with play money. It can also be taken a step further by setting up a small store, with their toys, that are labeled with the price. The child decides what they would like to purchase. If they do not have enough, they can go to the ATM to withdraw the desired amount, if it is available.
After a child has learned to count in multiples, such as fives, or tens, allow them to run a store and classmates, siblings or parents can be the customers. This teaches them to check to make sure they receive the correct amount, and it helps them learn how to make change.
It is also important to look for moments throughout the day to help teach children about money. When shopping for just a few items, let the child pay for items out of money that is given to them by the parent. This would be a good time to ask the child if they should be getting change back and how much they will be receiving. This is an activity for an older child, after they have learned about making change. If a check is to be written for the purchase. Show the child the checkbook balance before writing the check. Explain that this is money that was deposited in the account from a paycheck for work, or what ever the source may be. Enter the check in the register, showing the child the importance of each column, and allow the child to observe as the check is written, explaining each line.
Through watching for teachable moments, children can learn how to count money, make change plus other monetary exchanges, in everyday life.