Young children need to learn that money doesn’t grow on treesor get freely dispensed from ATMs. Here’s how to teach them the value of money.
- Explain how money works.
Your children need to know there is no such thing like printing press inside an ATM. It is essential to explain that ATM is like a big piggy bank in where you keep your money until it is needed to be used. Tell them that when you spend the money on your account, it means that you will lose it. You can only set it aside once you get paid by your boss. Remind them that they ought to buy the most needed things to make careful choices on how they ought to spend their money.
- Build your children’s financial skills.
Review the lessons they are learning at school by making a basic money equivalents illustrative chart. Post it either on the refigerator or on the desk. Help them practice exchanging pennies. Create a roleplay store by putting price tags on items around the house, such as: $50 for a pencil, $75 for a rubber ball, $2 for a Hot Wheels car. Help your children figure out the cost to purchase each one of them. Explain whether they have sufficient amount for purchasing the pencil, rubber ball or the car. Let them choose which one they want to get.
- Give your children a small allowance.
Once you want to go shopping, ask your kids to bring their own money whenever they think it is necessary for them to buy something. If there are any cases where your children keep insisting to get what they want not what they need, tell them to wait for the allowance day. Bodnar recommended, “If you give in, you’ve defeated the purpose.” As a result, if your children want to obtain something big, such as a new hardcover book or a toy, help them figure out how much they need to save each week in order to buy it. Make sure they have a clear plastic bank so they can watch their money increases. However, Dr. Blackburn advises teaching kids to do more with their money than spending it on themselves. She suggests encouraging them to donate part of their allowance to charity.The majority of experts agree that a children’s allowance should not be tied to household chores. “Children should help out around the house because they are part of the family, not because they are being paid,” says Irene Leech, Ph.D., an associate professor and extension specialist in consumer education at Virginia Tech University, in Blacksburg.
- Let your children do some spending.
When your children want to make a purchase, help them count out the correct amount. Let them hand the money to the cashier and wait for their change. If your children want to blow $3 on vending-machine toys instead of waiting to combine it with next week’s allowance to buy a Beanie Baby, point out the trade-off but leave the final decision to them. For instance, there was a case when Tracy Barta, of Zionville, Indiana, let her sons of 9, 7 and 4 years old, spend their allowance as they will. “However, I have veto power if I think an item is inappropriate or too sticky to eat in the car!”,shesaid.
- Offer ways to earn extra cash.
Kids need to learn that they can increase the amount of money they have but theymust work for it. Make a list of jobs your children can do beyond their routine chores, such as raking leaves or polishing silver, along with the amount you are willing to pay for the job. Paul Tedder, of Nashua, New Hampshire, reported that when his daughter, Meghan, 6, wants to buy something specific, he offers to dust the furniture or wash the car for a fee. “What’s scary is when she wants to give me one of her three-dollar haircuts!” Tedder quips.