A couple of years back, when I visited the store with my youngest, he would often wander into the toy aisle to look at newest and biggest toys in the colourful packages. He quickly learned that we don’t buy toys every time we visit the store, but sometimes he found a toy he just needed to have. He knew he can sometimes get something and the pleading began. The funny thing is that while some toys he wished for were indeed expensive, some were dirt cheap! Children often have no concept of the value of money beyond that we exchange it for goods.
This is why kids should be thought about money in direct and practical way. To raise money-smart kids lessons should start early on in the childhood and be regularly reinforced. Unfortunately more than 20% of parents have never discussed money basics with their children. But if you’re a parent trying to teach kids the value of saving money follow these steps.
Sit down with your kid and write down his wishes. Then you can research the prices together and write them down as well, as this is a good opportunity to teach them about pricing differences, so they learn to do their research and not give in immediate temptation. Encourage your child to set some big goals to teach them delayed gratification and some smaller ones. You can manage goals and their progress in the Homey app.
While average allowance in the US is about $15 per week, it starts smaller. Parents often quote numbers from $0.5 to $1 for each year of child’s age. This means a 10 year old would get anywhere from $5 to $10 a week. This allowance does not necessarily need to be tied to chores, but you can tie it to responsibilities.
Start a jar system.
Piggy bank is good, but it does not give kids a clear visual overview on how much they currently have. Use clear jars to save and teach kids to put their money into three of them: Spend, Save, and Donate. When you use clear jars, kids can see their money growing – one week they have one $10 bill in there and next week they add 3 quarters and a dime. When they want to use some of the money, they see how bills change to coins.
Take them to the store.
Take kids to the store with their spending money and their list of goals. Count how much money they have together and see where they are in terms of reaching their goals. Explain they can afford cheaper items from their list of goals, but if they spend now they will take longer to reach the long-term goal. Encourage them to set more money to the saving jar for the long term goals.
These lessons teach kids the opportunity costs and delayed gratification, which is one of the most important factors of future success in life. The key here is to stay consistent, set a good example, talk about saving and spending and showing children how to use money in the real world.