How to teach kids about money

In today’s society, money stands in for values. When choosing a product or service, the hard-earned money that you spend on them represents your desire and appreciation for those things. Money is how we trade value for value.

This is not evident to young kids, who may have abstract or misguided ideas about money. I remember going to a toy store as a little kid with a pocketful of change, thinking I could buy the biggest toy. The process of values and trading made no sense to me.

Teaching kids about money will prepare them to live in a world of value standards. Moreover, it will make them more successful and honest as a result. Here are a few ways that you can do it, even at an early age.

You are the example

This is an important fact to remember. Regardless of your teaching tools or how you explain money to your kids if you don’t follow your own rules, they probably won’t understand them.

Don’t allow yourself to gamble with money around your kids or joke about it in the context of impulse purchases. Show them you’re responsible with money whenever they’re around. If they see you throwing your cash away, they won’t understand what it’s worth.

Teach them about cost

You may not realize this, but the transaction process that trades paper money for things that aren’t paper money is pretty abstract for a little kid. Why do French fries cost paper?
You have to help your kids understand that things cost money before you can teach them about different money values. The physical process of paying for something could be enough to help their little minds figure it out.
Next time you’re at a gas station or grocery store with your kids, give them the money to pay for something. Let them hold the money and hand it to the cashier. This way, the actual process of paying for things becomes clearer to them.

How much does it cost?

Only after a kid understands the principle of paying for something can you teach them the values of different money and products. My dad had to teach a teary-eyed little me this hard lesson at that toy store.
Just because you have some money doesn’t mean you have a lot of it. You should show kids the different values of money in order to help them understand that it doesn’t just have value: it has different values.
Let them pay for a pack of gum with quarters and tell them how much it costs. Let them buy a drink with a bill and tell them how much that costs. The process requires patience, but kids need different examples and a consistent teaching method to understand the point.

Little jobs

In order to understand the value of money, let your kids work for a little of their own. By doing small chores and being paid consistently for work, your kids will figure out that money is worth effort. When they spend it, they will begin to understand that they are really spending that effort.
money stands in for values
Little Jobs

Encourage saving

One of the most common results of beginning to teach a kid that money is worth something is for them to spend it immediately on something they want. This is their immature interpretation of the fact that money has value.

By encouraging saving, you get the next big point across, which is that money isn’t just a tool for getting things but an investment in life. Start out by encouraging them to save for something bigger. Stop them from buying a small toy now so they can get a big toy later.

The Takeaway

Kids need guidance when it comes to money. Buying and selling is an abstract process that adults are used to, but which is foreign to small kids.

Providing good examples to follow and providing them hands-on experiences with earning, buying, and saving, you can make this complicated process much clearer to them. In today’s fast-paced world, there are many important things to teach your kids – the earlier, the better.