How can I teach my children the value of money?January 31, 2014
By YOU Program Facilitator
Question: My kids think money grows on trees. They think they're entitled to the latest toys and video games as soon as they come out, but I want them to work for nice things and earn them. How do I teach them to appreciate the value of money?
Answer: As a parent, it’s normal to want to give our children everything we can, especially those of us who grew up not having a lot things. We feel we need to compensate, but we have to be aware to not fall into that trap. Create a balance between what you give them and when you give it to them.
One of the first things that your children should learn is the importance of money. They need to understand the difficulties of earning it. Try giving them a certain amount of money for every age-appropriate chore they accomplish. Let them learn that they will only get money if they work hard for it.
Depending on their ages, you can apply the following strategy: suggest that your kids save up to pay half the cost of what they want and you’ll pay for the other half. If they want the item, they should be willing to earn it. Kids need to learn that if they really want something, they should wait and save in order to buy it. This strategy will also get them into the habit of thinking before spending.
Teaching your children how to save and manage money wisely will help them face future financial hurdles. You can even start teaching your children to save when they are toddlers. They probably receive birthday cards with money or checks from relatives during special occasions. Open a savings account for them and let them watch it grow. Have your children set a long-term goal for something more expensive than the toys, candy, or clothes they might have been saving for.
While you are working on helping them understand the value of money, you can use this opportunity to talk to them about the importance of donating to charities. Later in life, they will be in the habit of donating to those in need, which will help them value what they have. What kids learn about giving during childhood will last a lifetime.
Parents are the main influence on their children’s financial behaviors, so it’s our responsibility to raise a generation of conscious buyers, savers, and benefactors.
You can learn more about the issues addressed in this question in the YOU: Your Child's First Teacher book series. For information about teaching your child financial responsibilities, see the Through High School and Beyond book on page 40.