It is important to start teaching kids about money at an early age. The sooner they learn how to save and how to spend well, the better off they will be. A good way to start teaching children about money is by giving them some. Well, not exactly “giving” it to them, but letting them earn it.
Assign each child a chore and offer a specific amount of money for each time the chore is done well. Have your child place the money in a bank or a jar to see how fast it grows.
Then, the next time your out at your favorite supercenter and one of your kids says, “I want that!” you can find how just how much he or she really wants it. Ask your child if he would like to spend his own money to purchase the item in question. Many children will decide that the item isn’t as great as it originally seemed when it means paying for it with their own hard-earned money.
If your child wants the item badly enough to pay for it him or herself, discuss the quality, price, and overall value. If your child still wants it, let him or her buy it. If it is a cheaply made toy with a high price tag, your child will soon learn to choose higher quality items.
Also, teach children to shop by comparison. If a similar toy can be purchased at the dollar store for a buck, why pay $3.00 for it at the supercenter? Sure, it’s only $2.00, but those dollars can really add up. Explain it in simple terms, such as “You could have bought three of those, or three different toys, for the same money.”
It is also a good idea to teach children a bit about investing while they are young. Even if you aren’t exactly investment savvy, you can encourage your children to buy savings bonds with the money they saved, which will double in value in ten years. When the bonds mature, the money can be used to buy larger bonds.