Teaching Kids the Value of Money: Spending, Saving & Sharing

Teaching children the value of money at a young age is necessary to set a good foundation for financial independence.  In an era of high credit card balances and living “above your means”;  it’s time to take children back to a time of purchasing only what you can afford.  Children need to learn that money doesn’t “grow on trees.”  However, teaching  children the art of hard-work, patience and giving can be difficult in a culture of instant gratification and excess. 

So how are parents supposed to overcome everything children are learning through their peers and the media?  You set a good example.  Living within a budget, saving for your wants, shopping sales and using coupons are great ways to show kids how to be responsible with money.  Kids learn by example, after all.

A great way to teach children the value of a dollar is to help them learn to manage money on their own.  In my house, we have chores that pay a set weekly allowance.  Some chores are not “for profit” and are performed as part of being a member of the family such as cleaning your room and taking dirty dishes to the sink.  My kids can earn an allowance through jobs such as emptying the waste cans and taking out the recycle. 

My children can determine if they would like to earn their allowance or not.  If they choose not to do their “job” then they forfit their money for the week.  The goal here is to teach my children that they must work for their money and that they can’t expect it to be handed to them.

Once children receive an allowance, I belive they should do 3 things with it;  spend some, save some and give some.  A great idea that a friend of mine recently shared is to have the kids divide their money into 3 containers.  The containers are:

• Spending
• Saving
• Sharing

I believe that children need to learn that it is okay to spend some of the money they earn.  They need to reap the benefits of their labor.  They also need to learn that it is important to save for the future and to share what they have been blessed with.  The saving money must go to the bank and they can choose how to share their money.   Parents can talk with children on ways to share.  Maybe you would like them to tithe their share money, give back to those less fortunate or buy a special gift for someone.   Whatever you decide, make sure it’s something you and your child have discussed so they feel involved in the giving process.

My children’s spending money is theirs to do with as they please.  They can go to the store and buy candy or a small toy or save for something larger.  My children have started to realize that by holding onto their spending money for a month or two can get they can get a “big” toy.   It has taught them patience and they have learned to appreciate the toys more.  It also helps them think about what they really want.  It’s easy to “have to have” every item in the toy aisle when mom & dad are buying, it’s another when you have to work for it.  I admit, LuLu is much better at being selective than her brother.

Set a good example for your child and keep the financial communication lines open, and you can raise a money savvy young man or woman that will have the tools for financial independence.

Photo Credit: Pickpigs.com