January 1, 2009

How to Teach Children the Value of Money

Money, money, money.....
Creative Commons License photo credit: Pingu1963

The old saying, “A penny saved is a penny earned” is a wise tenet we were taught by our parents. Today, with computers and electronics, PC games and iPods, cell phones and Blackberrys, the latest fashions and footwear, one would need to save long and hard to afford any of these things. For some kids, wearing the most up-to-date clothes and sneakers is foremost on their minds.

Teaching kids the value of money has to begin at an early age. So too, if kids see their parents constantly buying new things, they will most likely want larger allowances and become as frenetic in their buying habits as their parents. Thinking back to when we were kids, if our parents couldn’t afford something we wanted, we didn’t get it. End of story.

Some parents today indulge children way too much, thus the value of money seems insignificant. Moreover, these kids may think their parents are rich when, in fact, they are trying to make ends meet just like the rest of us.
[ad#ad-2] The word “no” has to be placed back into the vocabulary when it comes to teaching children they can’t have anything they want. Moreover, instructing them how to save for their future is a method which has been lost in rearing some children today. It is not any fault of their own; our children are exposed to young actresses or teens who have inherited great sums of money and these are pervasive on TV and in magazines.

When we were children and didn’t have any money, spending a day at the park or enjoying each other’s company in or outside our home were sufficient. Not so today. With malls incorporating hundreds of high end stores, this is where the kids like to “hang out,” and are thus engaged in looking at the expensive displays of clothes, jewelry and electronics. Recently kids begged for the Nintendo Wii. Those who got one as presents should be thankful. Unfortunately, what they do not realize is their parents probably have to work overtime to pay for the cost of this expensive item.

How do we teach children the value of money and the importance of saving for their future? No doubt, this is one area parents are wrestling with every day. However, parents who incorporate an honest approach in explaining money to their children, do succeed in bring home the point – by example. Living with parents who were never considered rich by any means, we soon learned the true value of saving money, and the consequences of spending beyond our means. Kids cannot relate to the future; they deal with each day as it comes. If they were asked: “How will you support yourself when your dad and I are no longer here?” their likely response would be: “Why do I have to think about that now” or “I don’t want to discuss it now.”

It is a discussion parents must have with their children. There has to be an open dialogue where families can discuss financial matters with children (at an appropriate age, of course). When buy a piggy bank for your infant, open a savings account, clip coupons out of the paper with your child present, discuss purchases and decide as a family if it is affordable – these are the starting points at which your child will begin to understand the hows and whys of saving money and the ramifications involved when lack of money becomes a serious issue.

As parents, we all want to protect our children and ensure their future is better than ours. But by not disclosing money issues we are not protecting them, but allowing them to live in a world where they believe money will always be available to them, or by not showing discipline in our own spending habits, we are denying them the basic fundamental truth that money doesn’t grow on trees, that saving for their future is vital, and that assuming they will always be taken care of is an erroneous one. Conversely, maintaining limits by budgeting, carefully keeping track of spending, and keeping the dialogue open by allowing children to participate in family discussions about money, will give them a keen sense of awareness as to the pitfalls derived by overspending and impart the importance of saving for their own future.

Recommended: Mom’s Talk Network Guide to Family Budgets

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Alexis Rodrigo