The good news is you don’t have to make the discussion of how money grows complicated. By using a few unique strategies, you could help you kids understand in no time.
1. Break Out the Piggy Bank
OK, so the piggy bank may not sound innovative, but it is certainly a great way to give kids a concrete example of how money can grow from afar. In this case, you could also use it as a way to represent larger sums of money being added to a bank account.
For instance, suppose you open a savings account for your child. Each time you add $50 to the account, you could add 50 cents to the piggy bank. And as interest is compounded, you could add this equivalent as well. Since the money in the bank won’t be withdrawn, it’s good to leave the money in the piggy bank too. But it would be good to take the money out and count it with your child once a month or make marks on the outside of the bank to show that the money is growing.
2. Create a Money Tree
Another creative way to show how money grows is to create a money tree. Whether you draw the tree yourself or pull a tree out of a coloring book, you could decorate and post it on the wall then use it as a representation of money growing in an account.
So let’s assume that you’ve opened a kid’s CD account. As the account begins to grow and heads toward its maturation period, you could add play money to the tree to represent the money what’s growing in the account. If you add money to the CD using add-ons, it’s good to have the tree reflect the changes.
3. Build a Money Pyramid
If you and your child have made an agreement to save money up to a certain dollar amount then you could try to offer a more finite example of how money grows through a money pyramid. If you have blocks around the house that create a pyramid or even had the artistic talent to draw one on a piece of paper, you could cut it into parts then slowly rebuild it as you get one step closer to the goal.
When you finally add the last piece to the pyramid then you know that you’ve reach your goal together. Then it will be time to celebrate with some of the money and (hopefully) by starting again with a new pyramid that includes some of the savings and investments you’d already grown.
4. Visit Planet Orange
Planet Orange is a fun (and free) online game that teaches kids how to earn and grow money by letting them make investments through buying CDs, stocks, bonds, open bank accounts and more. By creating a free account, your kids can begin visiting various parts of the planet via a space ship that they must add gas to with their own “obux” money. The good news with this site is that you don’t have to pull your hair out trying to come up with ways to explain how money grows to your kids. The site does it for you!
The reason for opening a bank account for your kids is to teach them that spending money is fine but saving money benefits them in the long run. So take the time to translate in kid’s terms what’s happening with their money, whether you’re trying the above examples or using books that teach kids about money. The reward in your hard work will be that by the time they’re able to take over their own accounts, they will be pros at money management.