Teaching kids the value of money - Important for you and them

Jul 20th, 2007 by David Murphy-Colonna | Scroll down for comments

Im not going to lie, I grew up a spoiled, only child, pampered by mother and was never deprived of anything. Even though this was the case, one thing was for sure though, I still was able to learn the value of money from my parents through good example and consistency. And I thank them for that. As times change though and the gap between rich and poor grow, as well as the stereotypes of a perfect financial lifestyle become even more fairy tale-ish, it is important to teach our kids early on, the value of money.  

This may sound easy because young kids are impressionable but there are many dilemmas one may run into when trying to instill a sense of monetary value into their kids. Lets take a look at some problems, some strategies, and realize that it is not only important for your kids to to learn about money but that it will also help you out in the future.

A common misconception is that parents shouldn’t talk about money in front of their children, whether it be because they don’t think they earn enough, don’t have enough time, or maybe don’t even know where to start. I mean the capitalistic society is pretty harsh if you think about it :-/.

The first key to teaching kids about money is being consistent. Kids learn from example and although you may not notice they will be learning from you at all times, so find something that works and stick with it. But remember you want your children not only to learn from you but also learn from their own mistakes.

Here are some imprtant guidlines to follow and be consistent with:

-Do not force your kids to do anything, simply give them you advice and leave it open to them

-Let them make their own mistakes, but when they do, do not scold them, offer constructive crticism and explain what happened and why

-Include children in talks about finances whether it be at the dinner table, or elsewhere. Show them that money matters are important and  needs careful planning.

-Lead by example. This is so important. Show some restraint on buying high priced items sometimes as well, and make it known. Show that you cant always get what you want, or that it takes time to achieve certain financial goals.

One of the main questions that pops up when talking about kids and money is allowance. Allowance is a touchy subject especially since there is pressure from society; by this I mean, other parents are going to be giving their children allowances as well. The important thing to remember here is that kids must begin to realize that not everyon gets paid the same and that financial sitautions differ household to household.

Once kids understand that financial situations are different for everyone and that allowances cannot just be handed out for performing everyday jobs, such as taking out the trash, they will be able to develop more of a responsible mindset.  This may be hard but as they get older it gets easier, they will soon realize that Mom & Dad don’t get paid to take out the trash, even though they wish they did :-).

Make a checklist of many things to do in a week and make sure they do all of them.  As they get older a great way to let your children earn money is to let them perform certain larger projects(not clean thier room, but maybe the bathroon or the tub) that they will actually have to earn their money from and not necessarily receive direct gratification . This will teach them responsibility as well as good work ethic as the key to making money, as well as learning that jobs aren’ t alwasy fun .

This all seems like alot info, and there are going to be different situations for different household, but make sure you teach your kids the core values of Earning, Spending, Saving, and Borrowing.  Help them to understand the value why each is important.  Lead by example but also give them examples of each when you are talking about finances infront of them. 

 So why is this important for you as a parent?

Well, our goal is to teach our children as best we can in order them to survive in the real world and be successful in whatever they do.  But teaching them about money is a great starting point.  Not only does it mold them into understanding the capitalistic society, it brings about a good work ethic and a determination to reach certain goals.

With these goals and values instilled in their minds, a child becomes more independent and less reliant on their parents.  The child will start to realize what they want, and work towards their goals.  By the time I was a junior in highschool I had a job for three years and started to break away from my parents financially.  I realized they have given me alot, and now it was my time to start to pull my own weight.  Of course they help me out with bare necessities, and my college education, but it has got to be close to 5 years or so where I haven’t went to my parents for money for leisure.

I work hard for my money, and understand my parents did and still do.  They lead by example.  So as your child gets older and develops their own work ethic(which should be a goal for you for them) they will become less financially burdening on you.  This is where it helps you in the long run, to be consistant and lead by example financially, and as a matter of fact with everything you do.

Remember, give your child the freedom to make his or her own mistakes early on, this will let them either appreciate victory and understand defeat.  Be open and lead by example.  Do not let outside sources influence your situation too much, explain the different types of financial situations to your kids, as soon as you think they are ready to comprehend. 

Teaching your children about money, will not only help them to save money, but it will also save you money as they may become more fincanialy independent faster as they get older.  Learning about money will teach them how to set goals and how to plan in order to reach those goal.  Let them have their freddom but monitor and guide them along the way, this will instill trust as they begin to become smarter about their money.  

Although I am trying to teach you the importance of teaching your kids the value of money, here are two great links, that I learned alot from that have more techniques and plans to monitor your progress:

Children and Money Series: Teaching Money Habits for Life

15 Ways to Teach Kids About Money

Take a look at those resources, they are great.  Remember lead by example and be consistent, and your kids should be able to learn a great deal.  Good Luck

If you have any suggestions or questions about teaching kids about money.  Leave a comment.  Get involved and help one another :-).  We are all trying to improve our financial and personal situations in one way or another.  Tell us what you know about teaching children about money.

David Murphy-Colonna posted this article under Personal Finance on Friday, July 20th, 2007 at 1:50 pm You can follow any responses to this entry through the RSS 2.0 feed. You can leave a comment or trackback from your own site. View Technorati Linkbacks.