Kids and Money: How to Teach Children The Value of Cash
At some point, every parent realizes their child is ready to start talking about money. Either your kid is suddenly asking thoughtful questions, or playing “cashier” more often than not. Some kids even ask for a credit card!
When should you expect this development? Good question.
Kids and Money
Preschoolers will enjoy using pretend coinage as a mere accessory to their make believe dress up games, not unlike high heels or a top hat. It’s around school-age that they typically show an interest in the actual value of money and what it can do for them, according to Dr. Mike Amster of Warrenton Pediatrics in Warrenton, VA. A board-certified pediatrician and member of the American Medical Association, Dr. Mike says that around the first grade, kids start equating money with the work it took to earn it. “A five-year-old will take any money they have and run out and impulse buy,” he says. “By seven or eight, they start to understand that it takes work to obtain money, and perhaps they want to spend more wisely. By 10 years old, many are making frugal choices and saving for things they really want.”
Here are 5 ways you can educate your kids early about the value of money, and how it can work to their advantage.
- Start an allowance that corresponds to chores. For young children, making the bed and cleaning up toys each day may be enough to earn them a small weekly allowance. Each time you head to the grocery store, ask whether they’d like to spend what they’ve earned by choosing an item from the art supplies or cookie aisle. Don’t be surprised if they’re dismayed at how little their allowance can purchase; this is a good emotion to learn early on – imagine the child who believes a single dollar could buy them a hotel, and you’ll see why.
- Borrow their money from them, and when you pay it back, include a hefty interest payment. When they light up at the surprise, remind them that later in life the roles may be reversed, where they’re borrowing money from a bank, and when it comes time to repay, an extra fee (interest) will be incurred.
- Keep their cash visible. Experts recommend having three jars labeled “Saving,” “Spending,” and “Sharing,” so that kids know that money has varying power. Sometimes, it has growing power (saving), while other times, it has the power of instant gratification (spending). And of course, it also has the power to improve the lives of others (sharing). If the jars are kept within sight and reach, kids and money can coexist without your constant involvement.
- Play games with them. That’s right, teaching isn’t all lectures and instruction. Sometimes, you can connect with your kids and teach them valuable lessons at the same time. For ideas, check out the Secret Millionaire’s Club, an online game hub created by Warren Buffet, one of the most famous billionaires in the world. Games range from simple addition and identification of bills to more complex challenges, like how to make a kid-owned business run successfully. Once your little one graduates middle school, consider a virtual stock market, where he can safely invest, learning how to win (and fail) at trading stocks.
Above all, model the characteristics you’d like to see your kids adopt. If it seems like your lessons are going in one ear and out the other, take heart. Stick with it. It’s a rewarding moment when in their 20’s, for example, your college student thanks you for the financial lessons you taught early on.
If you yourself need help with you financial spending, saving and sharing contact CESI Solutions. We are here to help set you up for financial freedom, today!
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Filed Under: Banking, Education, Family, Financial tips and tricks, Healthy living, Marriage & relationships, Money management, Saving, Spending
Tagged: American Medical Association, bank, Mike Amster, online game hub, Secret Millionaire's Club, Time is Money, Virginia, Warren Buffet, Warrenton