Most young children don’t have any concept of money.
If you asked your five year old or your seven year old where money comes from what would their answer be? Logically they might say it comes from the bank or from your purse. In the bigger picture of things do they really know where money comes from and how hard you have to work to get money?
Children as they age start to understand that money buys food and toys. They grasp the concept that you have to pay for things. But they still get upset when you say no and they really, really want you to buy something.
As a child grows it is important to teach them about money.
It is important to teach them the value of each coin and bill and how to do money math. Such as how do you make up a dollar or twenty dollars with the given coins and bills.
It is also important to teach them where their money actually comes from. How hard did they work for it? Did they get the money from Grandma or Grandpa – how hard did they work for it? I believe that teaching a child that money is commission or compensation for work done is important.
I also feel that teaching a child how to handle money and to manage it is important. Teaching your child the value of a twenty dollar bill and what that twenty dollars can buy for them or what they can save for is important.
It is important for adults, parents to have a healthy attitude about money and budgeting and share that with your child.
Did you know most college students have no concept of budgeting, making money and how to save? Raising smart money children is important.
How to raise money smart kids:
1. Be honest.
Being open and honest with your children about money is a great gift and one that will help them well into the future. Explaining to your children what you can and can’t afford instead of just saying no. Communication is important.
For example Johnny asks you for the $20 transformer while you are in the grocery store. Instead of just saying no, explain that his birthday is a month away and we can put that on his wish list or explain that while you know he really, really wants that toy maybe he can save up for it because right now getting groceries is the reason we are shopping.
2. Teach them about money.
Children learn through play, watching and education. Teach them about money. As our son was growing we purchased a money kit and played store and taught him that he could buy this with fifty cents or a dollar. He also learned through school the value of a dollar through money math education.
Children also learn by watching. If you buy everything with plastic your child will grow up thinking that everything should be bought or that it is ok to buy things with plastic. Start using cash more often if your budget allows. If you need to learn more on budgeting check this book out.
3. Explain spend, save, share.
Money makes the world go round and it is important to explain that not all the money you have should be spent. I know lots of people who spend all their money and more, as I am sure you know people who do the same.
It is a great gift to our children to explain to them that yes they may have $20 in their pocket but they don’t have to spend it at all. They can save it, spend it or share it. Save it for a rainy day or save it for buying something big in the future – make a plan. Spend it, but they don’t have to spend all of it just because they have it. Or they can share it. They could use that money to make a difference in the world.
4. Set up a bank.
It doesn’t have to be a bank account. I think spend, save, share piggy banks or jars are great. I think children learn better when they can handle and see things versus money being hidden in a bank account. Set up homemade piggy banks or purchase a spend, save, share bank. When your child gets money as a gift or for work (chores) done let them decide where the money goes.
5. Be there, let them make mistakes and help them learn, answer their questions.
It is important to make mistakes, you learn valuable lessons from mistakes. Making mistakes should never be looked at as a negative, it should be looked at as a learning experience. Let your children make learning experiences. Be there to help them up, be there to teach them what the next step might be. Answer their questions, ensure that communication is open. Just like you teach them to tie their shoes, teach them about money.
The average college student will graduate in debt with no concept of how they will pay all their bills.
Teaching your children when they are young the value of a dollar and how to make it work for them will help them way beyond their years. The best lesson I think, no I think there are two money lessons I wish I was taught when I was younger.
Lesson one quit trying to keep up with everyone else, stop buying things to impress people. Lesson two don’t buy it unless you have the money for it. These two things would have made a world of difference…
A couple of amazing books to help you teach your children about money are:
Some great tools to help you raise money smart kids are:
Some great books for Mom and Dad: