How to Teach Children About the Value of Money

There are many ways to teach children about money and its value. This article will provide some guidance and suggestions on how to help children learn the value of money.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• A child
• Patience

1. 
   Start Early

   First, start by teaching children about the value of money as early as possible. There are benefits that are both short term and long term to this approach. In the immediate results, children might develop strong good-saving habits, make smart purchases, and possibly learn why we can't have everything that we want in life. In the long run, they can learn about debt, what investments are, how to look for high interest savings accounts, and how to save for their future.

2. 
   This is Not a Magic Money Box

   Next, most children have heard more than once that "money doesn't grow on trees." They are aware of this but they also see that sometimes when we need money, all we have to do is go to this little "magic box" called an ATM, and push a few buttons and there it is, "Voila!" Children need to understand that money is earned from working and investments and that people can only spend what they earn. To better show this, start by paying an allowance but stick to a strict pay period just as if the child was earning money at a job.

3. Another thing about allowance is that many people disagree on how an allowance should be merited. How much responsibility is taught if a child only does chores to get paid? At the same time, a child can learn the importance of working for money. A good idea is to pay a child for doing something outside the scope of regular chores such as cleaning the garage or trimming bushes.

4. 
   High Interest Savings Account

   Finally, teach children about savings by using a piggy bank or some other storage container to store allowance in. Make a simple graph, according to each individual child's needs, to show how the money "adds up." Reward good savings habits by giving an extra percentage of money to the child as "interest." This will help the child to learn the importance of keeping money for the longer term. After the child has saved enough money to open a child savings account, take them to the bank to let them start their own account. Many banks have lower minimum requirements for children.

Tips & Warnings

• Children will have questions so think clearly before answering and use these questions as teachable moments.
• Remind children that money is earned.
• Teach children to look for high interest savings accounts.
• After starting an account at a bank, reward the child because they have accomplished a major step towards financial fitness.
• Give allowance at a specific time and do not stray from this, just as a job wouldn't stray.
• If interest is paid to the piggy bank, make sure that it is done at the same time every month.

[hnatalieann]

on 10/28/2009 Great article and very true! Children need to learn this as early as possible. 5*'s and recommended you

[luv2blog]

on 10/26/2009 This is excellent. Very important tips on teaching kids about money - the earlier we start the better. ^5 and a recommend.

[chrisanimelo444]

on 10/23/2009 Money is important if you want to get anywhere in life. Great tips!

[inocence]

on 10/21/2009 good stuff man. When my son is alittle older (or a lot older lol) i will start teaching him the value of money. We just have to work on the walking talking thing first. =p

[sanderdoe]

on 10/11/2009 Welcome back! We've missed you here. Great article with lots of good advice on how to teach children the value of money. It will help them all their lives. 5* & R