How do your kids children money? Do you use the piggy bank or a bank account?

Physical currency is a wonderful and very real way to teach younger children about money. The fact that they can see it makes the lessons more at home. You can begin to use multiple “piggy banks” to physically teach them that saving is for different goals. See the lessons on money management for more tips on this.

Physical currency, however, does not teach anything about earning interest on money. As your child grows older the need to teach returns on investments becomes very important. Money in a savings account, fixed deposit or any other investment will yield some returns known as interest or dividend. A way out is to give out weekly allowances in physical currency. Then when your child is old enough, from 8 years, you can take the “investment” portion of their savings and move it into other things, starting with a savings account. This will give them the opportunity to learn how to make their money work for them. This is what investors do. Also use this opportunity to explain to them the concept of working for money and also making their money to work for them.

I will like to hear about your experiences with this. You can comment on this article or send me an email, gbonjute@eaddakids.com.

Thank you!

– Gbonjubola Sanni