Teaching your kids the value of money

Children tend to think that money grows on trees, they generally don’t understand the concept of life and finances, how mommy and daddy get the food, toys and clothes, they grow up with the idea that their parents just go to the store pick up what they want and that’s it.

Teaching kids the value of money starts by teaching them the definition of money first. And it’s the parent’s responsibility to open their eyes on this important matter one that will have a great impact on their adult life, building up their success or failure in dealing with financial responsibilities.

So for all the parents to keep in mind that it’s never too young to start.

What is money and what are the origins of money?

The best timing, to start answering this question is around the age of 4, when children start noticing that at the store their parents hand the cashier money before they are allowed to walk away with their things. The question that starts coming in is what is that?  Parents hold the weight of that answer and it’s an important one! As it will provide the foundation needed for the child’s understanding of the value of money.

The best way to print this first lesson into the mind of a child is to take one of each bill and coin and explain their size and value, what this can buy and what it can’t.

To make the lesson more fun and interesting, use your child’s imagination, by telling the story of how money was created and why people created it.

For readings we propose IT DOESN’T GROW ON TREES by Jon Bryant & Christpher needler.

How do you get money?

Now that your child understands what money is, you can explain that it doesn’t grow on trees but it comes from something called allowance, as this part of the lesson is the perfect time to introduce the concept of work and its importance in making money.

And because theory is not always enough, make a deal with your child where he/she will do specific chores that they don’t normally do, like set the table at dinner wash the car…etc for which they will earn their very own money.

How to use money?

Start by the idea of both you and your child preparing dinner for the rest of the family, then make a list of food you need and set a budget, a trip to the grocery store will help him/her grasp the idea of how money works. Have your child help you add up the prices of everything that is on the list, this will help them understand the importance of planning what you need to buy, otherwise you might not have enough money to pay for it.

How to save money?

Set saving objectives, once you know what your child wants to save for, might be a toy or a school trip, and figure out together how many weeks it will take him/her, and make a chart and your child can put a smiley sticker on the box once the money from that week is set aside. Don’t forget to reward your child for saving to keep the motivation going.