When children are very young they have no real regard or respect for money at all. They see what they want and can usually figure out a way to get it (depending on their age) through whining or guilt. But there does come a point when your 10 year old is asking for an IMAC laptop that you have to draw the line and say No!
When children reach 3 or 4 years old they begin to notice the cause and effect of money. They see mom and dad pulling it out of their wallets and being rewarded with stuff in return. They also are old enough to figure out that if someone gives them a dollar bill they can buy something they want from the candy aisle. What they don’t understand is that what they buy has to be less than or equal to that dollar. In my opinion, this is the best starting point for educating children about money. Elementary math will soon bring clarity to why they can’t buy something that cost $1.25 for a dollar; but it will not help them to understand the role that money plays in every day life.
One key point to understand is that our children will largely feel about money the way in which we portray it. If we are constantly obsessing about the cost of things, about not having enough, about feeling broke, about wishing for more; than our children will quickly pick up on the negative side to money. They will begin to perceive themselves at a young age as a has not. And on the contrary if we remain hopeful and respectful of financial situations and the value of money than our children will learn to do the same; feeling grateful for what they have and perceiving themselves as lucky.
The money worries of parents should not be passed down to our kids. We can avoid that and yet still approach the subject of money in a pragmatic way which will help to enable our kids in their future. Does this mean that we shouldn’t tell them that something they want is too expensive? On the contrary, by pointing out the cost of things and comparing items when we shop, we are showing our children respect for money and the work that earns it. It is wise to explain to children the cost of something by putting into terms of how long it takes to earn that money. For instance, is this sweater worth 3 hours of your father’s time at work? Children will then begin to unravel the cause and effect of working and the cause and effect of spending.
One of the best ways to teach a child, even a young child, about the value of money is to allow them to have and control their own. As impersonal as it may feel to give a child a gift card or a ten dollar bill, it really serves as a valuable life lesson. Taking them to the store armed with their ‘present’ they will begin to quickly realize the bang of a buck when the toy they covet is not in their price range. This is when the dialogue (and lots of patience) can be successfully opened up about saving the money they have to buy what they really want later or buying something on impulse just to have something right now. As difficult as it is to avoid just pitching in the extra 3 bucks so they can get what they want (and you can get out of the store) it is best to hold back and assert the lesson in life that they will not always be given what they want when they want it. Money may not grow on trees, but it can be earned in increments.
This is also a great time to offer to open them up a savings account of their own. Certainly the younger they are the more apt they will be to settle with the lesser thing. Pointing out how quarters, dimes and even pennies can add up over time helps develop patience and longevity in goal setting. As they age and are continually empowered with their own money they will begin to understand the impact that saving their money and making wise decisions financially can have. They will see the use of goal setting, saving and careful decision making and will be willing to take responsibility by earning extra money through odd jobs around the house. They will also become more appreciative of money gifts or allowance they earn and will feel a sense of purpose as they inch closer to their savings goal. When they are finally able to buy that special something they will have a greater sense of pride and accomplishment. They also may realize that they didn’t really want what they thought they did. It has been my experience that children are much more cautious spending their own money than they are spending their parents.
Educating children about money in their lives can actually enable them to have a successful financial future of their own. Aside from that, being conscious of our purchases and choosing to seek only the things we really need in life show our kids that materialistic collections are not what make a person rich. Children may not understand why some of their friends can go to Disney World twice a year when they have never been; but they are able to register that in the scope of life Disney World is not as important as the car they ride in, the roof over their heads, the food they eat and partaking in things that are really and truly affordable for their family.
Every family holds different values when it comes to money. As long as children are learning about money in a manner which empowers them and allows them to feel that all the money they need or want in life is accessible through hard work and wise decisions; they will become guardians of the dollar. As they do they will continue their money education through their endeavors and by using their family as a stellar example of responsible earning and spending they will begin a life that appreciates financial gain and fiscal responsibility. It is important to educate children about money in truthful, logical and positive terms that will allow them to develop a positive relationship with their finances. If this is accomplished early in life they may never ask you for the IMAC laptop and rather begin saving for it themselves.