When it comes to teaching a child about money and the value of a dollar, it can almost never be too early. Just the other day, my three year old threw a major tantrum in our local Target because he just “had to have” a random toy that carried an $85 price tag. No reason, really. It wasn’t like he asked to put it on his Christmas or birthday wish list. He wanted it right then, insisting over and over again that he “needed it,” then melted down in front of a store full of people.
If only my son could understand that mommy and daddy aren’t made of money. He isn’t quite old enough to fully understand what money is, how it works and the value of a dollar, but that doesn’t mean I can’t start trying to teach him a few things. It is always good to start educating them while they are young, and there are a variety of activities that can help a child grasp a better understanding of money.
Usually, it takes kids a few years before children really “get it.” A good way to start money awareness is to establish a savings account for the child as soon as their social security number is assigned. Next, purchase some sort of piggy bank while a child is very young and encourage them to continue putting spare change in it. Small children may not understand saving money, per se, but they understand the concept of having a lot of something and saving up a lot of change will strike them as neat.
A game that my three year old really enjoys is “treasure hunt.” Once in a while, I will gather up loose change that is sitting around the house and in my car, purse or husband’s junk drawer and I will place it in different spots around the house. Then, flashlight in hand, my son pretends to be on a treasure hunt and gathers up all of the change he can find in a basket. He deposits it all to his piggy bank and we count it together. He is still too young to understand exactly how much money he has or what one cent versus twenty-five cents is, but at least he is now familiar with terms like pennies, nickels, dimes, quarters, deposit, savings, etc. We encourage him to fill up his piggy bank and when it’s full, we take it to our local financial institution and deposit it into his account.
Once kids are a little older, they will have learned how to count money in school and then they can really begin to grasp the idea of saving and spending. In families where there are multiple children, one way to encourage the concepts of saving is to establish good-natured competitions between the siblings. Have each child set a savings goal for themselves. Their goal can be to save up for a special toy, spending money for a family vacation or maybe even the cost of visiting a local skating rink or inflatable kid center. On a weekly basis, have each child count how much they have earned. Obviously, the kids can earn money different ways and it will vary based on the child’s age and ways they can earn money (i.e. chores, babysitting, etc.). A simple chart depicting each child’s progress can be kept somewhere prominent, like the refrigerator, as motivation.
Once kids are in middle and high school, school shopping can become a true learning experience when it comes to the value of a dollar. The way to set it up is to define a very specific dollar amount as the absolute maximum that can be spent on new clothes or supplies for school. Allow the child to shop around for what they want, so long as they stay within the budget. With a little parental guidance, the teen will begin to see that through sales, coupons, and other deals they can purchase much more than if they pay full retail and only shop at trendy stores. The value of the dollar becomes more apparent through an activity they enjoy.
Teaching a child about money and money management certainly isn’t easy, but it’s a life skill that is incredibly important and will benefit them in the long-run. What they learn as a child sets the foundation for their spending and saving habits as adults.
Maria Rainier is a freelance writer and blog junkie. She is currently a resident blogger at First in Education where she writes about education, online degrees, and what it takes to succeed as a student taking a bachelors degree program remotely from home. In her spare time, she enjoys square-foot gardening, swimming, and avoiding her laptop.
For more ways to teach kids about money check out my whole section on Kids & Money.
photo curtousy of adam*b@flickr