Today we are talking about teaching our kids about money. Because how many of YOU wish that you had been taught how to handle money a little better, hm?
I personally feel that the starting place for teaching your kids about money is to teach them the value of a dollar. More and more kids these days don't have a clue what the value of a dollar is. But I don't blame them when parents are overpaying them for even the smallest of tasks (more on that later).
So. How do you teach them the value of a dollar?
First of all, start them young. When your kids are starting to learn about money and how to count and add it and such, that's when you should start teaching them about the value of a dollar.
I heard of one couple that gave their children a great visual of this one day. The father had just gotten paid so he took his paycheck to the bank and had the teller cash it out in dollar bills. When he got home he laid the bills out on the table for his two girls to see and told them he had gotten paid today and this is how much money he made.
"What should we do with it?" The dad asked.
The girls, with their eyes big over the amount in front of them, said, "Go to Disney World!!!"
"Well, that might be a good idea," said the dad, "but first we have to pay our bills."
Then the dad started taking stacks away saying, "This whole stack here we have to use to pay for our house so we have somewhere nice to live in."
"This stack here we have to use to pay for our electricity so we can have lights and cold food in our refrigerator and TV to watch."
"Then this stack we have to use to pay for our water so we can take baths and wash our hands and cook our food."
One by one the dad took stacks of money away explaining where it had to go and why. And as each stack disappeared from their sight, the girls' dream of taking the money and going to Disney World was diminished a little more.
At the end there was one small stack of money left over for their family to spend as they wished and it was a far cry from going to Disney!
I love this story because this father gave his girls a great visual lesson of the value of a dollar and also showed them where the hard earned money he makes goes!
I know for us, we are always trying to teach our kids the value of a dollar. Something that's important to us is that our children know how hard you have to work to earn them as well. That's why we don't pay them $10 for pulling weeds from our garden for 10 minutes. That's like paying them $60 an hour!! Instead we pay them amounts that make sense and are more like what they should expect to make in the real world.
We also try to use money terms that they will need to understand when they are adults. For instance, if we are walking in a store and one of our little darlings sees something they want to buy, we ask them if they have enough money for it. If they don't we tell them that we can buy the item for them and they can go in debt for it, later they can work off the debt to pay us back.
Never once have any of my children chosen to go into debt! And this has opened up lots of discussion over what debt is.
As my children get older, lessons will inevitably change and even more practical ways of handling money will need to be taught. But teaching our children the value of a dollar is a great place to start!
This post is just the tip of the iceberg about teaching kids about money, obviously. There's so much more I could share, but why don't you share below some ways you've taught your kids about money. I'd love to hear them!
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We do the same thing with our 7 year old. Our biggest feat with him was in July though. We went on vacation and his very favorite thing broke (his handheld DS)when we got home we gave him the choice to either throw it out or use all of his savings for it because he was beginning to think that everything was handed to him. He chose to buy himself a new one and this one has been taken care of far better than the first thus far. It took him a few days to recover from his bank saying he had $.00 but now he realizes that his not so rough chores pay off if he follows the rules and does them.
ReplyDeleteThat is a great way to show where the money goes and the value we place on money. Don't forget to start with teaching them everytthing we have and get to use and enjoy- all belong to God and hw to treat God's things and the things that blelong to others. We felt that was the true basic lesson on mney to start with- teaching everything belongs to God and how to take care of what belongs to others, then when they got old enough to understaan money and numbers- we started taching them how the world values money ad how we use it.
ReplyDeleteI could not get my cursor to show in this comment box for fixing spelling errors. sorry.
ReplyDeleteAll 3 of my children have bank accounts. And if they get a gift in the form of money, I make them put 1/2 in their bank account. They also do extra jobs around the house if they want to earn money or they call relatives and ask if they need something done to earn money.
ReplyDeleteMy older girls have been learning how valuable a dollar is by trying to save for things. One wants to buy a bow for hunting and the other wants to buy a laptop. We had them sit down and figure out how long it would take them to save that much. Now, when they find something they want, they think twice because they know how much longer they will have to save for their big purchase.
ReplyDeleteI'm having a very hard time with this partly because of the age difference in my kids. My son is almost 4 and my daughter is almost 2 and she has to do everything my son does. I'm having a hard time coming up with a system to teach and help my son earn and value money that I can adapt enough for my daughter to participate in. I need to do something, at the moment, every night when we get home my son says "is there a package for me? I want to get...." Apparently he thinks UPS will deliver anything he wants when he wants it by reading his mind....
ReplyDeleteI love the idea of cashing the paycheck in singles!
ReplyDeleteI did something similar, though it was kind of a dual lesson. When my boys were starting to get interested in girls, I wanted them to know IN NO UNCERTAIN TERMS, there are certain things you DON'T do and the consequences if you DO those certain things.
I gave them a hypothetical baby and a hypothetical part-time job at McDonalds. After taxes (which blew their minds) their "paychecks" were $100 a week. I gave them the $100 and took them shopping for their "baby". They "bought" bottles, clothes, diapers, wipes, lotion, etc.. and then they were out of money. I said that's great, but what is your baby going to eat, what are you going to eat, where are you going to live, etc...
Neither of them ever forgot that "shopping" trip or how money (and "certain things") works in the REAL world.
Fabulous tip! So true...our kids don't have the slightest concept of a dollar, and how far (or how little) it will go. I love the visual idea of cashing out the paycheck. Great idea! Keep 'em comin'! =)
ReplyDeleteLove it! I agree with you totally! I want my son to grow up and know the concept of a dollar and how far it really can go!!
ReplyDeleteI agree teaching about money is best done sooner rather then later. We use the Dave Ramsey for kids system and really like it. Our kids 6 and 4 will even ask to do a job for extra money!
ReplyDeleteI've always given my kids allowance, but I do it differently than many in that I do not tie it to chores. I figure I don't get paid for doing my household responsibilities, and I don't want them to grow up thinking, "What's in it for me?" beofre they load the dishwasher. But I feel everyone needs a little walking around money, so I give them a monthly allowance of $28. Of that, 20 is pocket money, 5 goes into their long-term savings that they can't use till they're 18, and 3 goes into our "charity jar" that we decide as a family how to use. They use their money for things like magazines and make-up, the occassional candy bar, claw machines at the movies, that kind of thing. When they're out, they're out. This helps them to budget, to plan, and to prioritize, as they'll maybe decide to skip a few smaller things if they know they have a trip to the mall coming up and may want to buy something more special. While they don't get paid for their routine chores, we do pay them a minimal amount for "extras" like cleaning gutters, washing cars, etc. Things we would maybe hire someone to do. When they turn 16 (which two of them have at this point), we cut them off from allowance b/c we excpect them to get a part-time job if they want money. They don't have to, it's their choice, but no more money from us.
ReplyDeleteAnne from http://bringingboryahome.blogspot.com
Great demonstration of how money is disbursed. We really like the visual demonstration. Here is a way to track your kid's allowance for weeding or whatever else: ALLOWANCEMANAGER.COM It also has a chore chart you can print...fabulous for keeping track of house duties!
ReplyDeleteThat made me think of The Cosby Show, when Cliff tries to teach Theo about money and gives him cash but turns the house into a hotel/restaurant so he has to pay for everything thus seeing how hard it is.
ReplyDeleteLove this! I am about to start giving my 4-year-old an allowance and am trying to figure out how to make her divide her money (savings, spend, charity) and what to make her do so it's not just free money.
ReplyDeleteMy oldest would ALWAYS be willing to go into debt to get something but then when it came time to working off the debt...there would be whining and crying (from ME!).
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