Simple ways of getting your kids to understand money's value
Kids and Money: How do we teach our kids its value?
“Mom, can I have this?”
You curse yourself for making the foolish decision to step into the Toys “R” Us with your child in order to buy that toy for your niece’s fourth birthday. Sure, you were only going to run in for a few minutes, you thought, and your daughter wouldn’t have time to ask for yet another new toy. Right?
Once again, you have been put in the position of not only saying “no,” but also trying to explain to your child in no uncertain terms that
a) You are not made of money and
b) It is not necessary to buy something every time you step into a store. For the most part, it is safe to say that children have a limited, if not non-existent understanding of the value of money. If they need something, they get it. If they’re hungry, you feed them. Why, they think, should it be any different with items that are for sale? The bigger question really is, mom and dad, whether you have instilled within them not only an understanding of how finances work, but an appreciation and respect for money and the ability to earn it.
Following are five tips to help teach your child to appreciate money:
1) Give them a weekly allowance – Even if it’s one or two dollars, the anticipation of receiving it and the option of spending or saving it will make the child more cognizant of its value
2) Open a bank account – It’s never too early to underscore the importance of savings. A junior account and regular reviewing of interest earned, any service charges and similar items will instil a respect for money that will be invaluable down the road.
3) Just say “No!” – Indulging your child in her every whim will not support a healthy view of money. Having to wait for something or saving up for a desired toy or game will make her appreciate the value of a dollar much more readily.
4) Invest in their knowledge – Teaching simple facts about the stock market, investments and related items will instil an understanding of the volatility of the markets and economics, as well as the value of waiting to cash out. The lesson here? Being patient will pay off (no pun intended) in the long run.
5) Teach them to budget – Making your child understand that the purchase of a big-ticket item or a family vacation may require months of budgeting will get your point across. No only will budgeting skills provide a sound basis for your children to make smart financial decisions as they become adults, but it will be a useful tool for them to have into their retirement years as well.
How do you teach your child about the value of money? What tips can you provide for other parents about this topic?
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