Money Matters for Kids

One of my children is obsessed with money. I mean, he’s really, really obsessed. At any given time, he is bound to have several dollars to his name…and for a 7 year old, that’s pretty good. He saves every penny meticulously, and is always asking me for a “money job” so he can earn even a nickel more.

I’m proud of his desire to save and earn, and even his ability to “let go” of it now and then and go shopping and throw a few dollars at a new Pokemon card. But, this obsession he has also led to many frustrations, disappointments and a child who is bummed because he is “poor.” It has led me to seek out advice from experts on helping our children handle money, and here is what I have learned from my experience, at least with our 7 year old.

1. Teach children at an early age what things cost. The grocery store is a great place to point out price tags on shelves. The sooner children can associate a number with being the price for something, the sooner they will understand the value of their money.

2. Teach them to save up for something specific. Let them choose something reasonable (like one dollar store item) and set a date for when that shopping trip will be. Before that day arrives, let your child earn coins by doing jobs outside of their normal routine. Of course this forces you to suffer through the aisles of the dollar store as your child deliberates over which piece of junk to come home with, but the thrill they get from buying something of their very own is worth it.

3. Be realistic with money amounts, especially with young children. Giving them coins and occasionally a one dollar bills is sufficient to satisfy their desire for money and teach them key concepts of counting and saving. Our tooth fairy usually gives 50-75 cents, although once in a hotel room all I had was a dollar bill and a credit card--I opted to give the dollar bill. So, our tooth fairy had to up her rates for lost teeth after that. But a handful of coins is a bigger deal to most kids than a one dollar bill anyway.

4. Teach them to keep it in a safe place. As your child realized the value of the coins or bills he or she has, they will hopefully learn the importance of keeping it in a safe place. I have five children under the age of 8, so you can imagine if there is a coin on the floor somewhere, *everyone* is going to claim it. My kids have had to learn quickly that if you treasure something (like you money!) keep it in a wallet or purse or even a zip lock baggie and keep it in a safe spot.

5. Teach your kids about bank accounts and credit cards and all that other adult stuff that they hear about but don’t really experience first hand. My kids think the bank is a money tree and I go reap my fruit whenever I‘m hungry for it. They need to learn where the money is coming from, why we work so hard for it, and where it all gets distributed. Teach them about credit cards and that everything has a price and if you don’t have the money for it, you shouldn’t buy it, even though anything seems possible with the swipe of the plastic card.

Let your kids enjoy the process of money. Learning some of these key points are so elementary but they will lay a foundation for smart and responsible money choices as they get older.


Websites with tips on teaching children about money:

http://www.moneyinstructor.com/parents.asp

http://life.familyeducation.com/money-and-kids/personal-finance/34481.html

http://www.pbs.org/wnet/moneyshow/makeover/article6.html