Teaching Your Child the Value of Money

Teaching our children responsible financial habits is one of the most valuable lessons in life. There are many creative, fun, and resourceful ways to teach children, ranging in all age groups, the importance of developing good money habits. By transforming daily activities, such as a visit to the ATM machine, the bank, or the grocery store, into potential learning experiences­, it opens up the dialogue for parents to teach their children the value of a dollar and how to use money responsibly.

Ages 2-5

• Coin Identification Game: Very young children may not fully understand the concept and the value of money, but they can begin to learn about its distinguishing features through the use of coins. Together, you and your child can use coloring and drawing as a resourceful tool. Trace around the outside circumference of an assortment of coins and then color in each corresponding shape. After doing so, match the actual coin to the image you have drawn while discussing the name and the features of each coin.

• Imaginary Store: A popular game that stretches and taps into children’s imagination is playing shop. By exchanging merchandise for play money, children learn the fundamental conception of commerce. Household items that can easily be found in the kitchen or the pantry, such as cereal and cracker boxes, fruit, or dish sponges, can then be exchanged for pretend money. Similarly, playing imaginary restaurant can promote the development of commerce while concomitantly, teach children about good manners, setting up a table, and paying the bill after eating at a restaurant meal. Let’s not forget about the tip and how to add an additional sum to an existing total. Children then begin to realize that when they are spending money, they need to save a little extra to pay for additional services.

• Sort and Save: Young learners love to sort and categorize a variety of items. Write the numbers 1, 5, 10, and 25 inside four paper cupcake liners and then place them into a muffin or cupcake tin. Then, give your preschooler a loose change jar filled with a variety of coins. Help your child to sort through the nickels, pennies, dimes, and quarters into the corresponding value cups.

Ages 6-8

• Bank Trip: By offering your child an allowance, it provides them with opportunities to take on an active role in managing their own money. With their allowance money, children can open a savings account, make regular trips to the bank, and make deposits into their personal account. As their balance increases, parents can discuss with their children the idea of interest and how banks pay their clients for saving money. Children can also learn about the different deposit slips that are associated with bank deposits and withdrawals. Many banks now offer accounts that do not require a fee or a minimum balance for children’s accounts.

• Take Advantage of the Internet: There are many age-specific money games on the Internet. There are creative and fun games and videos that teach children about navigating through money and finances. Programs such as Sesame Street are teaming up with financial institutions to offer games that teach educational lessons to children.

Ages 9-12

• Yard Sale: If you’re cleaning out your garage, closets, or attic, encourage your child to take on the ownership of overseeing the project. In doing so, it enables him/her to take on the responsibility of establishing values for each item, making decisions, and interacting with potential customers.

• Create a business: Encouraging your child to create their own business is a great way to teach them how to use money in the form of operation. Designing a business can be a simple as utilizing your child’s hobby. For example, setting up a lemonade stand, baking cupcakes and selling them to your neighbors, or even drawing beautiful pictures and “selling” them to your family members. The idea is about showing your child what it costs to start a business and how to keep the business running by using its revenue to not only pay the owner (in this case your child), but to spend and save it for future business expenses.

Ages 13-15

• Setting a Budget: Work with your child to set up a budget to help him/her to monitor spending, whether it is daily lunch money, school necessities, or outings with friends. By discussing the distinction between what one needs and what one wants, children in their early teens learn to prioritize their money and figure out the best way to spend or save it. Children may find that when they work at $10 per hour and then they decide to get a drink at the local coffee shop, a crafted drink can cost them 1/3 of what they just earned in that hour. This tangible experience allows a child to see how quickly money can be squandered.

Ages 16 and older

• Introducing Stored-value Cards: Parents can use stored-value cards, such as an American Express or a Visa card, as an easy tool to teach their children about financial responsibility and credit. Parents can purchase different denominations on these cards and re-load them with a set amount of money. These cards function and look like credit cards. Teenagers have the opportunity to use these cards to make purchases without using cash or running any risks that are attached to credit cards. Parents can also place a portion or all of their child’s allowance onto the card so that the child is able to practice financial independence and develop habits of budgeting.

• Charitable Donations: In addition to teaching their children about financial accountability, parents can also teach their children about social and civic responsibility by encouraging them to donate money to a charity of their choice. Together, parents and children can choose five charities and organizations that interest them by researching their purpose, how donations will be allocated, and what percentage of the donations will be put towards the cause.

Establishing a healthy perspective of the use of money is an important life skill. Setting up opportunities to explore the above options with your child is a sure way of giving them an opportunity to understand the value of a dollar.