Most young kids don’t have any concept of money. They don’t see much difference between five dollars and five thousand dollars. Kids often get upset when you won’t buy them the latest toy to hit the market because it’s way out of your budget. They don’t understand that you can’t afford to spend that much money on a toy. They just know that it’s something they want and can’t have. That’s one reason why teaching your child the value of money is so important.
As they get older and begin to understand that money has value, they will either learn to appreciate it or take it for granted. How money is handled and the attitude about it around them will likely shape the way they view it. It’s crucial that adults model the right attitude about money so that kids will grow up with a healthy attitude about it.
You’ve heard the stories. College kids going into unnecessary debt because they thought there was an endless supply of money on the other end of that plastic card. We want to raise money-smart kids and that education starts from when they are young and continues through adult-hood. Because, let’s face it, we never stop learning about how to make and manage our money.
Tips and Suggestions for Teaching Children the Value of Money
As a parent, you know that before your children can handle money responsibly, they have to understand the value of a dollar. They need to know that toys, clothes, food, etc. are not free. They should know that you work to earn the money to pay for all of these things. So, how can you teach your children the value of money?
5 Secrets To Raise Money-Savvy Kids
1) Give your kids an allowance for doing certain jobs around the house throughout the week. At the end of the month take them shopping. It will be harder for them to spend their own money on toys and they’ll become more selective about what they buy.
2) Teach kids the difference between wanting something and needing something. Your needs should always come first and they include things like food, clothing and shelter. If you have money left over, you can choose to save it or get some of the things you want.
3) Encourage your children to save money. When they earn money for doing chores or when they receive money for special occasions, encourage them to save at least part of it if they’re not willing to save it all.
4) Teach your child the difference between a sale and a good deal. If you buy something just because it’s on sale but you don’t have any use for it, then it’s not a deal and you’re really wasting money.
5) Let them learn from watching you. Take them to the bank or grocery shopping with you when you go. It will help them to see how much things really cost. Let them watch you make a budget and pay bills and it will help them learn how to handle money.
When you talk to your children about the role money plays in your life and everyone else’s, it will help them to see it from a new perspective. As a result, they’ll learn the real value behind a dollar.
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When To Start Teaching kids about Money
There is no specific age to start teaching kids about the value of money. Since they learn and mature at different ages, it will be different for every child. However, you do want to start introducing them to the concept as soon as they are old enough to count and understand what it is.
Young kids can start to learn what trading means. Trading a favorite toy for a different favored toy can get them use to the idea of giving up one thing to gain another.
Note: Do this sparingly and in specific teachable moments.
When kids are older and they start to learn how to identify money and the value that is placed on each coin and dollar, create a small store in your home. Add a few fun trinkets to it and place a price on them. For younger kids, start off by using a few cents as the price. Older kids will be able to count out dollars. Make it fun and allow them to shop in the store as a reward for saving a certain amount of money.
All kids can learn about money by watching you at the grocery store. Let them help figure prices and even help hand over cash to pay for items.
The sooner you begin teaching about money, the easier it will be to teach them how to earn, save and spend money responsibly.
Resources for Teaching Kids about Money
Dave Ramsey, the creator of Financial Peace University, has created Financial Peace Jr., a unique kit just for teaching kids all about money. Created for kids ages 3-12, the kit comes with step-by-step instructions for parents to take kids through fun activities to teach them to learn to make wise financial decisions.
TheMint.org is a special website created to help parents and educators teach kids how to be good money managers. It includes a special fun section just for kids with ideas for earning, saving, spending and giving.
Your local bank is a great resource for teaching kids about money. Most local and many national banks have special savings programs that encourage parents to help their kids save and bring it to the bank for a reward. Check with your bank to find out what resources they have for kids.