How to teach kids the value of a dollar
submitted by Tim Goodwin
“Can I get that?” – It’s what every parent gets asked. Whether it’s a stuffed animal or a sugary dessert, kids want what they want when they want it, regardless of cost. But that’s not their fault. They can’t be expected to know the value of a dollar unless it’s explained to them. That’s why teaching kids the basics of money should be a top priority. It sets them up for success later in life and reduces the number of times you’ll be asked, “can I get that?”
Start the Conversation Early
It’s never too early to talk about money with your kids. Obviously, a toddler won’t be able to understand the intricacies of social security, but a 4-year-old can help you clip coupons and store loose change in a piggy bank. At age 6, you can even open a bank account for your child, teaching them to deposit their allowance money and birthday checks. Many banks have fee-free “children’s accounts” for that very purpose.
Make It Educational
Financial decision-making is not typically taught K-12. That means the responsibility is yours. Set aside time to talk to your kids about building a budget, paying off debt and other money principles. It’s also important to help them differentiate between “needs” and “wants.” Food is a need – the latest game system is not. If you’re not sure how to have these conversations, Dave Ramsey’s Smart Money Smart Kids is an excellent resource.
Create “Kid Jobs”
While giving your kids an allowance is an easy way to make sure they have money when they need it, it can lead to bad habits. If kids receive a “paycheck” every week without having to earn it, they’ll be less likely to appreciate the value of a dollar. Instead of just giving kids money, give them opportunities to earn it. Assigning household chores is an easy way to explain the relationship between work ethic and income.
The old adage is true, “money doesn’t grow on trees,” but if you don’t explain that to your kids, they’ll assume it does. However, you can easily dispel that misconception by having thoughtful conversations. With a little effort, soon, your kids just might be the ones telling you to hold off on buying that new cell phone.