Help Your Child Understand The Value Of Money!
Posted on June 22, 2008
Filed Under All Ages |
I am constantly getting the following question: “How do I teach my child the value of money?”
This is an excellent question, and there are probably thousands of good answers. I have many ideas and suggestions, and today I will share one of them with you.
One of the problems with children and money is that they don’t participate in the process of money often enough to ever grasp it on their own. Parents often think that their children will just absorb it as they grow older and as they are around the parents conducting financial transactions, etc.
But, the children rarely participate in the actual processes… thus, they don’t benefit from the exposure in the same way they would if they were more involved in the actual process.
Let me give you an example that may help you better grasp this concept. Imagine your children riding as a passenger in your car every day for the past 11 years of their life. They ride to school, to the store, to the mall, to grandmas… they ride with you everwhere. But, when your children are with another parent, and they are asked how to get to their house… they don’t know! You are shocked… you think to yourself, what have they been doing for all these years… have they just been staring out of the window aimlessly ? The truth is, that because they have not been helping navigate, drive, give directions, look for street signs, or really do anything else in the actual “process of driving”, they absorbed absolutely nothing from all those years of riding in your car… this isn’t their fault… they are not malfunctioning…. its just a simple fact of life and human nature… a human doesn’t absorb anything while just passively participating… participation in the actual process is usually required for the average person to gain something from the experience. Yes, I understand that there may be some extraordinary people out there that violate this rule of nature… and great for them… but, most of us do not. So, its vital that you understand this concept, and apply it to the lesson of teaching your children the value of money.
Now, lets return to the question of how to teach your child to understand the value of money…
It is vital that you include your children in the actual process of money, finances, and actual money transactions. Here are a few examples of how you can do this:
Lets say for example that you go out to dinner… as opposed to normal, where you would simply direct your children to order, occasionally vetoing your childs choice because its too junk foody, or perhaps because it costs too much, etc… instead try a different approach… when you are seated, give your children a budget… say $8 (this could be much higher or MUCH lower depending on the location or occasion)… then, let your children pick from the menu (of course you still retain veto power when it comes to poor food choices), and have them use their budget as a guide… thus, if they would normally order a lemonade with their meal for $1.99, they could opt instead for water (free), and come in under budget, etc. Next, require them to always come in at or under budget… and for the fun part… if they come in under budget by a quarter or more, allow them to keep it! This will instill in them a valuable life lesson… the life lesson of being thrifty… and I am not talking about being cheap… don’t teach your children to be cheap… teach them to be thrifty. If you make this a regular habit, and continue this for years and years and years, you will instill in your children a great lesson… the value of money. They will grasp it, they will understand it… and more importantly, they will begin to take pleasure in “saving money” on things… because you will be rewarding them for doing so. Make sure that you include that part… if you don’t you will probably never be able to get your younger children to enjoy doing it… and it could end up a complete waste of time.
Here is another great example:
Lets say that you take your family to the local pizzaria, or bowling alley, or mini golf park once per month. I don’t know about you… but, it seems impossible to escape these establishments without spending a small fortune on video games, skee ball, the toy claw machine, and food… I suggest that you think about how much money you would normally spend on your children, say $20 each (the amount doesnt matter), and when you arrive, tell your children what their budget is. At this point, instead of the children just spending like mad, and continuing to ask you for more money, or to do this or to do that… they have to think about each event… and weigh how much it costs, with what other things they want to do, etc. Now, I do want to say here… that you will need to assist your children. If they are very young, you will need to explain what each thing costs, and try to help them come up with a plan. If your children are teenagers, they may not need much help with the adding, etc… but, they probably could use some good words of advice as to how to spend their money. Additionally, as always, it is vital that you let your children keep whatever they don’t spend. - REMEMBER, each time your children forgoe one item or want or pleasure in favor of saving that money for something at a later date and time, you are forging into their character the idea of being thrifty and being a saver. Our country has lost its way on this subject, and this concept has not been past down to todays generation… even though it may drive you nuts to see your children save $5 from the bowling alley and then later spend it on something totally worthless, don’t let it get you down… your children are doing something that will greatly benefit them later on down the line… as they are demonstrating the ability to think about each purchase with a budget in mind, and with the idea that by going under budget they are saving for the future… let me repeat that again, as this is one of the most powerful concepts that you can teach your children:
“the ability to think about each purchase with a budget in mind, and with the idea that by going under budget they are saving for the future”
Think about that for a moment…
Do you see it now ?
This single concept will help them live a more financially responsible life, and help them make better financial decisions for the rest of their lives.
Robert Mandrake
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