Help Kids Understand Money

When my daughter was about 3, I asked her to please take care of her toys or she was going to break them. What she responded to me made me realize we needed to help our kids understand money.

Are you wondering what she said? It was nothing bad it just made me realize we were not doing our job of teaching her about money. She said, “It’s ok; Dad will just buy me a new one”. Yes, she was only three but we should start teaching them at a young age.

THOUGHT WE WERE DOING FINE

This story happened 4 years ago and we have made an effort to talk to our kids about where money comes from, how hard you work for it, and the importance of saving. We thought we were doing fine but then an eye-opening experience happened.

This experience happened again with our now 7-year daughter. We had just bought her a pair of snow gloves. She wanted to take them to school because it was a snowy day. I asked her again to please take care of them and do not lose them. Then I added, “OR YOUR WILL HAVE TO BUY A NEW PAIR”. This was the BEST THING I could have said.

Can you guess what happened? Yep, she lost them, the brand new pair the first day! She was afraid to tell me after school because she thought I would be upset. But you know what; I wasn’t because the responsibility was now on her.

HELP THEM BECOME RESPONSIBLE

After she told me, I asked when it happened and if she checked the lost & found. Then I repeated what I said earlier, “If we can’t find them, YOU will have to buy a new pair”.

I made her responsible and this was the game changer…

One week later, after no luck of finding the gloves we told her it was time to buy some new ones so she could play outside in the snow.

SHOW THEM MONEY

Now we thought about just going to buy the gloves then taking the money from her account but we decided to let her see her money leave her own hands.

We had her get her piggy bank out (really a mason jar) and get enough money for a new pair, $20. Again I realized that we were doing a horrible job of showing our kids money. Our 7-year-old daughter did not know a dime, nickel, quarter, or penny. Or how much they each are worth.

It is important to talk about money but what about showing kids money, are you doing this? We were not and I realized how important showing them money is to help kids understand money.

LET THEM BUY SOMETHING

After we had counted enough dollar bills, quarters, dimes, nickels, and pennies to equal $20, we were on our way to the store. At the store we found a couple of choices, one was $19.99 and another was $29.99. We explained to her that one was the amount she had but the other was $10 more. If she wanted the $10 more pair, we would have to loan her money to pay for it but she would have to pay us when we got home.

She picked the cheaper pair. At checkout, she handed over the money and we counted all the change (holding up the line!). The teller was amazing and my daughter got to experience buying something herself (we did pay the tax!).

MY DAUGHTERS THOUGHTS

Because this story was about my daughter, I wanted to share her thoughts on the experience.

When we were counting the money she said, “This is a lot of money and now my money is almost gone”.
When we were purchasing the gloves she said, “This is NOT a fun thing to spend my money on”.
When we were home she said, “I am going to take care of my things because I do not want to buy them”.

SET THE RULES & STAND BY THEM

You need to set some rules for your kids that make them responsible for the things they have. If you want them to work for money, give them their rules (jobs) and only pay them if they do the work. Make it like a real job! We are in the process of finding a way for our kids to make some extra money but there are things that we expect them to do without getting paid because they live in this house (clean room and pick up toys for an example).

The rules we have is that if we buy them something they needed (clothes, school stuff, etc) and they lose or damage it before they have outgrown it. They have to replace it with their money because we already provided it to them. You may think this is harsh but think about it, will your kids take better care of something if they know that they will have to replace it?

I think your answer is probably, YES!