As parents, we want our children to understand how to earn money through hard work, and how to save carefully, spend wisely, and give generously. Simply saying “We have to pinch our pennies” or “That costs an arm and a leg” is not going to help them truly understand these complicated concepts. Children learn these important lessons through real-life experiences. Here are some simple but important ways to teach children of any age about money.
Money has to be earned
Earning money is hard work but this concept can be difficult to understand for kids. You can start teaching your child about how money is earned by paying them for assigned chores. When you mention the word “chores” in front of your kids, you may hear moans, groans, and complaints. The truth is, chores are not only necessary to keep a family household running smoothly, they are a great opportunity to teach your children valuable lessons including responsibility, work ethic, and life skills. When everyone in the family pitches in to do chores, it builds self-worth and helps each family member feel like they are contributing to the family. Some families may find that giving an allowance helps children understand the concept of earning a “paycheck” or allowance while other families may assign a dollar amount for specific chores. Give your kids important lessons on the value of the dollar.
Budgeting
“Any money that our children earn or receive is divided into 4 categories. Tithe 10%, family tax 10%, any amount they choose for savings, and the rest is money to spend or donate. We feel this gives them a sense of how to allocate their funds and has them realize that not all that they earn will be theirs when they receive a paycheck” says mom of three, Candice Zimmers. Every family will have different expectations for savings, spending, and other categories; the main goal is to help your child understand how to budget and save while giving them choices on how they spend their money. If they make a poor choice to spend all they have earned, they are forced to face the consequences. This lesson is best learned when the stakes are lower at a young age, than as an adult when the consequences can be life-altering.
Developing realistic views of how much things cost
It is hard for children to understand the value of money when they don’t have a realistic understanding of how much things cost. While running errands with your kids, show them how much it costs to fill the car with gas, how much the grocery bill is, and how to compare prices while shopping. Give your kids $20 in cash and ask them to purchase the family lunch at the grocery store. This is a simple lesson that helps them understand the cost of living. “I put the children in charge of the family eating out money,” says Sarah Brandt, mom of three. “You want to eat at McDonald’s tonight? Cool, but that means no pizza this weekend.” Give your kids important lessons on the value of the dollar.
The gift of giving
There is great value in teaching children to give gifts to others. They learn to be generous, thoughtful, and experience the joy of giving. They also learn the important lesson that gifts do not need to cost a fortune to be cherished. Give your kids a budget and have them think about what each giftee they are purchasing gifts for truly enjoys. Come up with budget-friendly gifts your children can buy or create that will bring joy to each person on their list. This process helps your children develop thoughtfulness, budgeting skills, creativity, and the joy of giving while understanding important lessons about how much things cost.
Understanding banking
Investing, saving, and how banking works are great lesson to teach children. For preschool age children, have your kids place money in a glass jar. This gives them a visual of the money they are earning and they can watch it grow. Older children may benefit from opening a bank account. “I opened a checking and savings account for my 11-year-old.” says mom of three, Michelle Lyons. “I asked for a check register so she can learn how to balance her account. I also got her a stack of deposit slips to learn how to do that as well. I explained to her the importance of not telling people her PIN, how to shut off her card if it is misplaced, and the importance of saving.” It’s also wise to warn your children about the dangers of credit card debt. The credit limit is often far higher than a young adult can handle and the ease of swiping a card to pay for items they want or need is tempting. Interest rates are high and the debt can quickly stack up. Talk with your teens and young adults about credit cards before they make mistakes that can cause problems long term.
The best way you can teach your child about money is to give them real life experiences, allow them to start making decisions on their own at a young age, and to lead by example. If you are a spender and buy items on impulse, they may develop these bad habits as well. If you are a saver and keep a careful budget, your children will likely develop these healthy habits. If you set a budget that allows you to give generously, your child will take notice. If you and your partner often fight about money, this could cause your child to view money discussions in a negative context. Try to remain positive and help them understand that money is not always an enjoyable topic to talk about, but it is important and can help develop security and independence for the future.
Easy Ways to Teach Children About Money
• Assign chores, and pay them an allowance. Help them create a budget for spending.
• When they have reached the goal, small at first, and let them go out and purchase the item when they’ve reach the goal.
• Teach them to give to others.
• When your child receives a gift of money, explain that someone worked hard for the money and chose to give it freely.
• Take them shopping and allow them to help compare prices and options.
• Give them cash, and have them pay for items in the store themselves.
• Be careful about always using a credit card. Use cash to show them that money is exchanged for goods and services.
• Encourage your teen to get a part time job.
• Set a good example by using budgeting and careful spending.
• Be open and honest about money, spending, and be willing to answer questions that come up.
Appropriate Chores by Age
You’re ready to make a chore chart and get started but you may be wondering about age-appropriate and realistic chores for your children. Here are some ideas to get you started:
• For 2-3 year olds – help make their beds, pick up their toys, sweep the floor, wipe up messes, dust furniture, match socks.
• For 4-5 year olds – make their own beds, pick up their rooms, carry groceries in the house and help put items away, pick up after themselves (pick up one activity before getting out new one), water the plants, pull weeds, set or clear table for meals, sort laundry by color.
• For 6-9 year olds – help take care of family pets, help fold and put away laundry, sweep and vacuum the floor, take out the trash, help wash and dry dishes.
• For 9-12 year olds – load and unload dishwasher or hand wash dishes, help prepare meals, rake leaves, help with younger siblings, clean mirrors, help clean bathroom, walk the dog, mop the floor.
• For 13-18 year olds – clean the bathroom, do their own (or the family’s) laundry, wash windows, cook simple meals, babysit younger siblings, mow the lawn, help with pet care.
Sarah Lyons is a freelance writer and mom of six children including triplets. She enjoys reading, writing, and spending time outdoors with her family.
