Teaching kids about money involves several aspects. First, kids generally learn about the face value or denomination of money, usually when a parent or relative gives them a few coins, and may explain that a penny is 1 cent, a dime 10 cents, etc., and what each is worth relative to one another. 10 pennies is equal to a dime, 5 nickels equals a quarter, and so on. Later on, but they do not have to necessarily be in order, kids learn that money can be exchanged for goods, such as when a parent might explain that in order to get a toy that the child may see in a store, or on TV in a commercial they (or you) must exchange money for the toy. A little later on usually, kids learn that when they receive money, they can save that money up to buy something they want. They may not have enough money at the time, but if they save up money they receive, one day in the future they may be able to buy that certain toy or item.
Unfortunately, this is where a child’s education about money sometimes ends, even into adulthood.
The “real” value of money, in essence, is that it can represent future opportunity and freedom. Money should not only be thought of as a vehicle to purchase things, but as having value to allow one to make choices in life that one would otherwise be unable to make without it, have the means to take care of oneself or family, and have the freedom to make choices that being in debt does sometimes not allow us to make. Often, we are constrained by financial obligations and all of those things we must have and save up for, that we do not realize we are limiting opportunities and the freedom of choice when it comes to our lives that financial freedom can bring us. Not having enough money can limit our job choices, where we live, and what we do with our lives.
How do you teach kids about the value of money ?
- Start them saving early-Give them an allowance starting at a young age, and get them used to saving money-just for the sake of saving.
- Teach them not to save just to spend- If they save money for things, instead of saving for their future, it will be difficult for them to realize the freedom money can give them in the future. Making them save a percentage, and not taking every cent in the piggy bank to buy a new toy or game, is a good idea.
- Stress the importance of choice and freedom- saving money for education, experiences, etc., as opposed to materialistic things. It’s not always about things. Sometimes having money in the bank allows you to do things you would not be able to do without money.
- Use real life examples- Explain that if they buy the new Star Wars toy, they won’t have any money left. This will limit their choices in the future.
- Let them make mistakes, but point them out so they learn from them. It’s OK to let them make mistakes, but try to teach something when they do.
- Teach them to be generous- All the money in the world won’t buy friendships, relationships, or love. While money can be an important tool, relationships with people are more important in the grand scheme of things.
Photo by Eliazar
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