When I was a kid, learning the value of money was easy – any money I had, I’d either spend on apple drops or I’d put in my piggy bank.
When I needed something I’d up-end my ‘bank’, count up the money, and what I had was what I could spend. Because it was all cash, the lesson was relatively simple: you get money, you save money and you spend when needed.
Today, things are more complicated. Having money and having cash are different things. You can get cash from ’nowhere’ by simply pushing a few buttons on a wall and you can spend money online without going near your wallet or even checking your bank balance.
Money is no longer a physical ‘thing’ and what you have to spend is no longer just the cash in your wallet. So how do you teach your kids the value of money? After all, they don’t need to either see it or feel it in their hand in order to spend it!
This is a question we’ll be revisiting time and time again on this blog – hopefully with everyday examples, best practice thinking and common sense advice.
But today, lets start with three simple starter steps for 5-8 year olds:
- Start teaching your kids about money as soon as they start to receive it. As soon as your child starts receiving money as a present or a sneaky windfall from Grandpa, buy them a piggy bank so that they have one central place for it to go.
- Appreciate that because most children choose instant gratification over long-term fulfillment, compromise is needed. If your child has $5 burning a hole in their pocket, give them $1 to spend immediately and explain that the remainder of their $5 is going into their piggy bank.
- Give them a goal. We all respond better to goals so take time to identify something your child would really love to receive, be it a new bike or a trip to the American Dolls shop. Stick a post-it on the piggy bank with the goal clearly marked and start them saving! If your child is older, you could even start a count down on the post-it – e.g. Movie Fund: $4 saved, $16 to go!
PennyOwl: Helping Parents Raise Money Smart Kids
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