Teaching Kids The Value Of Money

Posted by Julie Clark Robinson on June 25, 2010
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We all want to teach our children things that will help them when they are older. Right up there in importance is how to appreciate the value of money. Before you come up with a strategy, make sure that you and your spouse are in agreement so that you can present a united front as you go forward. Here are some idea starters for you:

1. Money doesn’t grow inside your parents’ pockets. For an early lesson about supply never quite reaching demand, start by turning your child down when he asks for something that costs money. Then launch your discussion about how the money you have ended up in your wallet in the first place – hard work on your part. Explain that you make so much per week and that’s how much you have to spend.

2. Giving allowance is a good way for kids to understand getting paid on a schedule. Although child-rearing experts vary on this one, there’s no denying that your children will benefit from having money to handle for themselves. If you pay them once a week, help them decide what their own personal goals are for their earnings. The key here is sticking to your “pay day” schedule so that they can plan accordingly. Regardless of how you feel about paying your children to help around the house, it’s the money itself that provides the lesson.

3. Bring on the piggy bank. Hopefully by this point you’ve instilled in your child the desire to tuck away at least a small portion of money every ‘pay day’. You’ll need someplace he can call his own to put it, whether it’s a piggy bank or a real bank account. Explain how money earns money by saving it someplace and leaving it there. If you’re just using a piggy bank for now, you can play the role of the banker by giving interest on the money within from time to time. Be sure to make a big deal of it when your child counts his money and realizes that it has ‘grown’.

4. Explain how easily debt can grow, too. Once your child has a grasp on how interest can add to his savings, explain that it increases how much he owes on a loan as well. Extend a loan so that he can buy something before he has saved enough money for it. Set up a repayment plan for him, including a payment booklet so he can keep track of his progress.

Now that you’ve discussed the basics of money handling, be sure to plant the seed of more lofty topics. You could explain that money isn’t always good for material items; it can provide meaningful experiences such as attending a sports event or ballet. Point out a retired person enjoying himself and reinforce the message that with enough planning and saving, a person can retire and enjoy life to the fullest.

Julie Clark Robinson has written more than 100 articles on family and education related topics. Her interests range from early childhood education to online colleges, online degrees for students with learning disabilities, and need-based financial aid programs.

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