What's It Worth? Teaching Your Kids About The Value Of Money

The following guest post is by John M. Box, Ph.D., Senior Vice President of Education, Junior Achievement (JA) Worldwide.  Information about JA programs follows the article.

If you’re a parent and you’ve stood in line with your kids at the check-out, you know the tiring push and pull you do. Those last minute items your children are desperate for – snacks, toys, candy, drinks.  An attempt at refusal almost inevitably ends in a tantrum of sorts. Parents struggle with the wish to give their children all that they need and the desire to teach them about financial responsibility and the value of money.  Now, more than ever, we all need to teach our children some important lessons that will serve them well for their future.  As we know, this type of education starts at home and is hopefully reinforced with other influencers and educators.

As a way to help them develop a better understanding of money, try the following activities with your children.

  • Keep track of the value of the goods and services that you provide your children such as housing, food, clothing, and entertainment. Share the total dollar amount with your children at the end of the month. Hold a discussion with your children to reinforce this concept and to gauge the degree to which the concept has been understood.
  • The next time you go to the grocery store, provide your children with a list of the items you plan to purchase along with a dollar amount that you plan to spend. Have them make the selection of products from all of the different brands that are available. As they make their choices, explain comparison shopping. Can they select all of the items on the list and still stay at or below the amount they have to spend? Ask your children what they have discovered as a result of this experience.
  • Have your children make a list of all of the things they would like to have, such as clothing, books, video games, toys, music CDs, etc. Add up the total value of these items. Now, ask your children to identify different ways they could obtain the money necessary to purchase these items. How would they prioritize their purchases? Use this activity to provide a perspective on the value of different items and the amount of time it might take to earn the money to purchase them.

You can then use these activities to begin a discussion about working for an allowance or earning money through a part-time job to save for something special. No matter what age, there’s always a lesson to be taught about money to your children. The earlier you start, the sooner they can begin to make wise financial decisions for themselves.

John Box is Senior Vice President of Education at JA Worldwide. Junior Achievement (JA) is the world’s largest organization dedicated to educating young people about business, economics, and free enterprise. JA programs are taught by volunteers in-class and after-school at locations throughout the United States and in 123 countries. To learn more about JA and its programs, or to locate the JA Area Office nearest you, logon to the JA Worldwide website at www.ja.org.

Comments

  1. I’m a speaker for high school and college students, so I address the issue of money a lot in my keynotes and workshops. I continue to be amazed at the lack of financial education that students receive both inside the classroom and at home. In my business, we’re working on a couple of new projects that will hopefully help students learn more about handling their personal finances.

  2. @DDFD I agree completely that other people make it harder, that is why I try to make sure my Child is the best example he can be… it doesn’t always work very well cause kids will be kids and I can’t fault him for that.

  3. Another tip I have always read was to use cash in front of your kids. A lot of kids and teens think the credit card is a magical card that you never have to pay back.

    Just the other day I was in a store and I heard a little girl say “but they take credit card” after her mom said the item was too expensive!

  4. Do you think that totaling up how much is costs to keep your kids and sharing it with them might have a negative effect? I only ask because my husband’s family was continually in the red throughout his childhood and youth, and the kids were very aware of how much is cost to feed and shelter them. The money was too badly managed to afford health care or even regular meals, and he’s told me stories about having pneumonia or needing stitches and just not going to the doctor because he felt so guilty about how much it would cost his family.

    I want my kids to be aware of and knowledgeable about money, and I want them to use it wisely, but I also don’t want them to develop a guilt complex about their cost of living. Saying something along the lines of “see how much it costs me to keep you? So stop begging for gum at the grocery store!” seems to send the wrong message.

  5. I was fortunate that my parents financially supported me my whole life growing up. But I do also appreciate the fact that I was not spoiled, and they taught me the value of a dollar. Things that I wanted I still needed to save and pay. It has helped me a lot now that I am a bit older and my mentality towards money and savings.

  6. I opened a joint checking account)with debit card privileges) with my daughter when she was 13. Our credit union facilitate this; I found banks would not.

    My rules were simple:

    1) She started with a $50 cushion
    2) I made a quarterly deposit into her account
    3) 10% of the deposit had to be transferred into savings
    4) 10% of the deposit went to charity of her choice
    5) If her balance ever went below the $50 cushion, she would forfeit the next quarter’s allowance

    She’s nearly 17 now and has never dipped below the $50 minimum.

    I’m a proud Dad.

  7. I’ve been carrying out your second suggestion for a while now. When my kids help with the grocery shopping I give them parts of the list. They go around, comparison shop, and bring me the items I’ve asked for. If I give them a coupon, they know to compare the price of the brand name coupon vs. the store brand. They also know to report the price of the item they’ve selected so we can add it to the running total. Nothing goes over $100 for the week or they help select what gets put back. If they ask for something extra, they know they have to wait until the entire list is purchased to see if there’s $ leftover.

    My kids have thrived on the sense of empowerment and independence they get going through the store together on their own and having some input and control over what’s on the menu that week. The side effect is they also have an acute awareness of how much food costs and how their choices affect the family budget.

  8. I had about 3 rounds with my daughter in the grocery store over the candy at checkout (wonder why it’s there?), and was fortunate in that she gave up as the answer was always no. It was difficult to stick to that no, but truthfully the calories are not beneficial and sometimes yes, sometimes no would not be beneficial to her character either.

    I give her an allowance equal to $1 for every year of age per week. I make her put 10% to charity and 10% to her savings account. I also make her bank 10% of her gifts from Xmas, bday as well. She is 12 and has $5600 in her own bank account. I deposit $25 per month in it, but the rest is “her” money. I give her the envie to open when the statement comes in and we go over it to see the interest payment and to balance the deposit slips against it as well. She decided that the purpose of her rainy day account is to pay for her wedding (in the very far distant future, I hope). I also stopped buying comic books, videos, games, music, etc., for her when I started the allowance. I do still buy real books for her, but all the fluff she wants, she buys. She figured out in a hurry that a used Nintendo game plays just as well as a brand new one! I also make her save up to pay for her friends’ Xmas gifts, while I pay for the ones for family. She has learned how to save up for big ticket items, where I match her dollar for dollar. She got a wii that way, and the parental unit gets to use it too as it is half ours. We have also had discussion about stocks and the market; her grandmom gave her a few shares of stock and we look that up periodically and talk about how the price gets set, etc. I also get her to help me “do the math” at the grocery store and help evaluate which products are okay in store brand and which need to be name brand for taste or perceived value. I think I will take an idea from a prior commenter and send her off with the coupons to “hunt and destroy” the grocery list – that’s an excellent idea!

    I have also made it a point to discuss the cost of living with her — here’s the rent, the car payment, the cost of fuel, the cost of food, insurance — as well as explaining why we have to have them ( we can’t walk to work; what insurance is, etc.). I have not told her the dollar amounts of either my pay or our bills, but we have plugged in examples based on minimum wage, and she can’t see how one could live on that! I told her flat out she would have to go for more education to hopefully get better pay and that seems to have piqued her interest as well. We have also had discussions about debt and how debt is bad, etc., which may not stick. I have refused to “loan” her money and have refused to advance her allowance, too. I also make her work in my office, for which I pay her, with a check. She doesn’t like doing the work, but I ignore that, as she loves the check!

    I don’t know if any of this will set a habit for the future, but I hope that it will at least make money management easier for her, and that she won’t be so scared when it’s her turn to deal with it.

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