You first start learning about teaching your kids about money on that special trip to Wal-Mart when your child first throws a tantrum because you won’t buy her a Barbie doll. Some people will grab the child from the shopping cart and leave the store fuming and red in the face. Other parents might opt to purchase it (hey, it’s only five bucks) just to continue shopping in peace and avoid any future humiliation. Eventually you will have to learn to say “No” and teach your kids about money.
Step 1
Show them the money. Show them copies of the household bills to explain to them why sometimes you can’t afford the things they want. Children aren’t aware of how costly living expenses can be, and the only way to explain it to them is by showing them. Break it down into their terms. If they want a $300 iPod, explain how many bags of groceries you could buy with that money. You don’t have to show them a copy of your paycheck, but at least allow them to gain an understanding of how much money is spent toward bills on a monthly basis.
Step 2
Don’t give an allowance. You don’t get money without working for it, so it’s important to explain this concept to your child at an early age. Instead of just handing out an allowance each week, pay them to do household chores. Create a list of chores that describes how much the child will be paid for each task they complete. This will allow them to grasp the value of a dollar. The amount you pay per chore is up to you, and it is up to the child to determine which chores he wants to do and how much he wants to earn. Order a customized chore chart online from DLTK (see Resources for link). Hang it on your refrigerator to serve as a reminder to your kids.
Step 3
Teach them to budget. If your son is begging you for an expensive game system that you just can’t afford, help him learn how to budget his money to save up for it on his own. It will be a rewarding experience when your son has finally earned the money and can buy the system himself. Kids take better care of their belongings when they are forced to buy them themselves. My Budget Planner 4 Kids is an inexpensive software program that will help teach your kids to make a budget (see Resources for link).
Step 4
Play games that teach about money. One of the best and well-known board games that teaches kids about money is Monopoly. When played correctly, you can really show your child the value of money. Another good board game that deals with money is Life. Life is a great game because it actually goes through a series of events an individual would face in his or her lifetime and gives purchasing options to choose from. If your daughter opts to spend all her money on the fancy mansion when she has an average-paying job, she will suffer financial consequences later in the game. You can use this game time to bond with your kids and also explain real-life situations that occur from bad money management. For ratings and reviews of money board games, visit Rate It All (see Resources for link).
Step 5
Offer to pay a partial amount for very expensive items. When the time comes and your baby is finally a teenager, you might feel pressured to buy her a car since “all the other mommies are doing it.” As much as you would love to hand over the keys to a new automobile, sometimes you just aren’t financially able to. Explain to your daughter how you can’t afford to make the entire purchase on your own and offer to pay what is affordable to you. Encourage her to get a part-time job to raise the rest of the money needed to buy the car she desires.
