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Teaching Kids the Value of Money

Ever had that conversation where your child thinks that every time he loses an item, you’ll just magically buy him a replacement?

Unfortunately, we live in a throwaway society, in which it’s cheaper to buy a replacement item than it is to repair the old one, and where children frequently know the price of everything and the value of nothing. That’s why most young children are totally unconcerned if they lose their pencils or pens. Their reply is always the same: “Never mind, Mum, we can just buy a new one!” But because the average standard of living is higher than ever before, parents typically have more money to spend on buying their children the latest clothes, toys and equipment. And this means that you have an uphill struggle when it comes to developing your child’s financial understanding.

Your heartfelt plea – money doesn’t grow on trees – usually falls on deaf ears! Here are some suggestions for changing their flippant attitude and how to instill the value of money in children.

Be prepared to say No

Of course, you don’t want a confrontation with your child over money, especially because it’s the principle that bothers you, not the actual expense – which you can afford. So the next time he comes to you unconcerned that, for example, he has lost his notebook somewhere in his room, tell him to go and look harder for it. Your child needs to start taking better care of his things.

Set limits on purchases

You don’t need to tell your child the exact amount you are willing to spend on his replacement items, but explain that you only have a certain amount of money, so you have to stick to that budget. Point out that if he loses or breaks the item again, you will not get him another one.

Give him some facts about the family’s income

It can be helpful to outline some of the financial commitments you have each month, such as the mortgage, utilities and food. This gives children a broader perspective, encouraging them to understand that there are many other demands on the family’s finances. While not wanting him to feel guilty for asking for something, you do want him to grasp that there are other monetary priorities, too.

Make sure he saves

Encourage him to think carefully about how he spends his weekly allowance and any other cash presents he receives. Suggest that he saves a proportion of his pocket money, perhaps a minimum of 25%. He could put this into a piggy bank in his bedroom, or into a proper bank account. Although your tween may resist this initially – because he wants to spend it all at once – he’ll get used to the idea.

 

Plan ahead for major purchases

Suppose your child tells you he wants the latest computer game, which is relatively expensive – he can either save for the item over a period of months or you could offer to match whatever amount he puts towards the cost. What matters is that he begins to accept some financial responsibility for his own consumer needs and starts to make a serious effort to contribute to these purchases himself.

Suggest charitable donations

Suggest that he gives part of his weekly allowance to charity. It need only be a small amount (although he can give more if he wants to), but that act of giving will help him understand that the money needed to replace what he loses could be better used elsewhere. Get him to personally donate to the charity box to emphasise this idea.

Does your child need help with his self-confidence? http://thefinder.life/kids/young-parenting/5-easy-steps-help-your-childs-self-confidence

By Dr. Richard C. Woolfson, Young Parents, March 2015

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