Kids and Cash: 5 Ways to Help Your Child to Appreciate Money

by Samantha on June 18, 2011

“Mom, can I have this?”
You curse yourself for making the foolish decision to step into the Toys “R” Us with your six-year-old daughter 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.
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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 instill 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 instill 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?

{ 9 comments… read them below or add one }

Melissa Sharon June 18, 2011 at 2:19 am

We don't give our kids a weekly allowance nor do we pay them for chores, since we feel that chores should be done because they are part of our family. HOWEVER, we do let them earn commission when they do a particularly big job (like help rake leaves for their great grandma or help me with mopping the floor). They save their money and then we let them decide if they want to spend their money or not. Soon, we are going to start implementing giving into their lives as well - so that should be interesting!


Samantha June 18, 2011 at 2:27 am

@Melissa Sharon Hi Melissa, it's great for kids to learn the value of money as well as realizing that as part of a family, they have to contribute and that doesn't necessarily always translate into receiving cash. Agreed that each chore should be looked at individually and if there'something that's particularly taxing, then maybe it is one where they can earn money.
I'm sure the whole prospect of giving money away will be an interesting one, for sure!
Thanks for commenting.


Melanie June 19, 2011 at 3:49 pm

I think allowance is a good place to start. It's important that they understand from a young age that everything has a value. And of course, learn to pay themselves first (e.g. save 10% of everything they get). Then, hopefully when they get older they won't live off of credit like so many people do today.


Holly Ann June 20, 2011 at 3:11 am

I think allowance is a great way to teach children the value of money, especially the young children who are still very innately ego-centric and have a hard time grasping any sort of abstract concept. When our kids are old enough to do chores, we plan to assign specific allowance values to specific chores. That way, the kids will get paid for exactly what they do. That's what my parents did and it worked wonderfully. And the consequence is natural, which I love - simply don't get paid if you choose not to work. That's real life, right? Thanks for posting! :)


Samantha June 22, 2011 at 12:50 am

@MelanieHi Melanie,
I totally agree. An allowance teaches them the value of money and that it is finite - and that money doesn't grow on trees. It also takes on a new meaning when it's their own, and not their parents. I like the idea of saving at an early age as well.
Thanks for commenting!


Samantha June 22, 2011 at 12:51 am

@Holly Ann Holly - I love the idea of "paid work!" ;) My house might actually get a bit more organized with this tactic! Already my daughter wants to earn more money so she's been helping more with chores - a "win-win" situation all around!


Cathy June 22, 2011 at 1:46 am

I hate to say this - but I make my kids pay for whatever they break - out of their allowance. True story. My 7yo (who gets $2/week allowance) just intentionally broke my husbands lanyard for his sunglasses. Guess what - that's 10 weeks no allowance. And we make them pay for their own video games, etc… if we go out to a place that has them so he feels it. I know, I'm mean.


Samantha June 22, 2011 at 4:10 am

Hi Cathy,
That's not mean - that's teaching your kids the value of things and of money as well. I'm sure he won't forget having to forgo some of the things that he would have liked to have bought with that money that he has to hand over. Good lesson that is likely one that will stick!
Thanks for your comment.


valeria kholostenko August 30, 2011 at 11:40 pm

Check out ALLOWANCEMANAGER.COM a way for kids and parents to log on and keep track of their allowance, and its free!


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