Money is a part of one’s daily life, so it is extremely important to understand how to save and spend money wisely, the difference between needs vs wants, good money habits, and the overall value of money. These concepts may not always come to mind, but these processes all contribute to how your money is spent. Even though children may not have their own money to use until they are a bit older, it is extremely important to teach them these concepts about money while they are still young, as they will help them manage money better when they become adults. My board game, Neko Doubloon Quest, teaches children how to use their money for useful and necessary items before buying things for fun.
It is never too early to teach your kids about money, as instilling good habits regarding spending and saving money wisely should start as early as possible to increase understanding of the concepts. In an online study conducted by mint.com, results showed that over half the respondents stated that they earned money while in or before elementary school. Most respondents also claimed that they did not feel prepared to manage their money after high school, so much so that one out of three people that partook in the study ran into early credit card problems. When kids become teenagers, they will most likely have a rather large list of perceived needs rather than actual needs, such as the newest iPhone or latest fashion compared to actual needs such as food, especially if their parents indulge themselves regularly with luxury items. When a child witnesses spending habits such as this, they will assume that these things are essential when they are not. When proper habits are started while the kids are young, they will grow into teens and young adults who know the value of hard-earned money, reinforcing the fact that a solid education in money matters, as it will aid them for the rest of their lives.
In order to teach kids needs vs wants when it comes to spending their money, you have to show them items and explain their use and how it affects survival/living rather than living luxuriously. The difference between needs and wants is a very important skill for kids to have, but it is a concept that will be hard to grasp until they are properly taught. The simplest way to explain it is that a need is something you must have to survive, such as food, water, and shelter. A want is something that is nice to have but can live without, such as ice cream or a stuffed animal. Needs are basic requirements that must be fulfilled in order to survive, limited, something we must have, a necessity, essential, stays constant over time, and may result in the onset of disease or even death. Wants are goods and services that an individual would like to have, unlimited, something you wish to have, a desire, inessential, may change with time and will result in disappointment if not met. Once kids understand the difference between need vs want, they will become more cash clever.
Knowing the difference between needs and wants will help benefit good money habits. “Without a working knowledge of money, it is extraordinarily difficult to do well in life,” says Sam X Renick, co-creator of Sammy Rabbit, a children’s character and financial literacy initiative. “Money is central to transacting life, day in and day out. Where we live, what we eat, the clothes we wear, the car we drive, health care, education, child-rearing, gift giving, vacations, entertainment, heat, air-conditioning, insurance—you name it, money is involved”. Despite plenty of research proving just how integral it is to teach children about money, plenty of parents are not helping their kids become financially literate. The T. Rowe Price’s 11th Annual Parents, Kids and Money Survey found that nearly half of parents admitted that they miss opportunities to talk to their kids about money and finances, and a quarter of parents said that they are very to extremely reluctant to discuss financial topics with their children. This lack of money education for children is concerning, as it connects back to the other survey that stated how most people did not feel prepared to manage their money due to lack of proper money education, so much so that one out of three ran into early credit card problems.
Kids are curious and are eager for their parents to share their wisdom, so much so that half of the children that were in the survey said they wish their parents taught them more about money while growing up. Even if a parent is reluctant to teach their kids about money, they will have to learn lessons about money one way or another in order to survive, but it’s all up to how well and how early they are taught for them to use their money the smartest ways.
Sam X Renick, co-creator of Sammy Rabbit, a children’s character and financial literacy initiative, states that the earlier you start a child’s financial education process, the better. He also says that lessons should begin before age seven because research shows that money habits and attitudes are already formed in a child’s brain by then. Once a child is old enough to know they shouldn’t be sticking pennies in their mouths, they can be introduced to coins and cash by being taught what money is and how it is used.
Showing a child how money works is more effective in their learning, so it is important to let them see others making purchases with cash. Even if the purchases are with a debit or credit card, explain to kids that your money is being used to make purchases. Chase Peckham, director of community outreach for the San Diego Financial Literacy Center, did this with his son and daughter when they were preschool age by showing his kids receipts with the amount he paid. “By doing it over and over again, it became habit to them,” he says. “As they got older, they started to understand. That’s how we introduced money,” Peckham says that his son understood how money worked by the age of 4, thanks to this receipt strategy, and even though his daughter had a bit of trouble understanding it at first, by being consistent she finally understood as well.
There are many examples of how to teach a child these concepts of money through everyday life, and a child is never too young to start learning about it. It is important to start with the basics at a young age, instill a habit of saving, create opportunities to earn money, help kids learn to make smart spending decisions, help children learn the differences between needs and wants, and model good financial behavior.
Of course, children love games and can learn a lot from playing them, so it makes sense that there are games out there that teach kids about money. While people often believe that Monopoly and The Game of Life are the best board games for teaching money, there are a lot more options available than those classics. However, not as many (if any) combine these important concepts and are often just for counting money and spending it rather than focusing on need-based spending. This is why my game, Neko Doubloon Quest, is so important for children to experience. Learning the value of money starting young can help a child for their whole lifetime, as shown by the various research that was presented in this analysis.