We have been working hard to teach our children about the value of money, and I have often felt lost during our debt repayment at how to include them in it because I want them to learn from what we are doing. So tonight I am diving into some of the ways that I am trying to raise kids who know the value of money.
How to teach your kids the value of money:
- Have open discussions them about money
- Let them see your finances in action
- Allow age appropriate “jobs”
- Set savings goals together
- Allow them to handle real money
- Set up piggy banks or bank accounts
- Let them spend their money
Have open discussions with them about money
Our children are three and five years old, and they are aware that we are in debt and that we are working to pay it off. We do not make it a scary topic for them to hear about, but we do discuss it when they ask to do things that are not in the budget.
When we made the decision that I would step out of my part time position at the hospital, we talked about what that would mean do to our spending in a way that our oldest would understand.
At five years old, they think all you have to do is pull out a piece of plastic, and there is an endless supply of money there (some adults feel the same way about credit cards). To help them understand this better I bring him with me when I go to the bank to fill my cash envelopes, and make him a part of the process.
My mom ran into one of the teachers aid’s this week that help out in my son’s classroom, when asked what his biggest goals was he answered “for my mom and dad to pay off all their debt, then take us to Hawaii debt free!” Ha ha, yeah kid, I am right there with you. Especially on days like today where the weather is -37 degrees Celsius!!
Let them see finances in action
Without fail, every time I pull out my bullet journal to start paying our bills, one or both of the kids comes to sit beside me. They watch me check our bills off one by one as I pay them, and know that when I am done we get to go cross some lines off our debt free charts (find them for free here).
We are a couple years away from this right now, but as the kids get a bit older I allow them to sit down and play around with the math with me. I plan to teach them how to open the apps and pay the bills. I want them to see how it is that I know which bills to pay and when. They are free to ask questions or just to watch me if they’d like.
I want them to see the numbers in our accounts grow as we save up an emergency fund, pay down our mortgage, and save up for holidays. I want them to know what it is to set goals, and be a part of the celebration when we achieve them. Our debt free charts have been an amazing way that they, as little kids, can easily visualize creeping closer to meeting our goals.
Each time we fill up a chart we make it a big deal. It’s all dance parties, alcohol free “champagne,” and high fives all around. We all get together and watch as the last of our lines are all filled in and then party like its 1999… even though they weren’t alive yet…
Its easy to overlook sharing your financial how-to’s with your kids because it is such “boring” grown up task to do.
“How to manage your finances” is not a class that is being taught in school (at least it wasn’t when I went to school), so if you are not teaching these things to your kids who will?
Many people are unwilling to share their financial information with their children, which I understand. However, I have met several people who, as adults, not only felt insecure about finances, but also felt lost about how to even manage money on a basic and practical level.
Children mimic what they see, if you have good money habits, they will soak that in.
Allow age appropriate jobs
Dave Ramsey talks about his kids getting commissions for work they had done around the house growing up. The idea being that the kids are expected to help with the basics as a given, but then they could choose extra tasks that would pay them a little something per task.
He wanted to teach them that money doesn’t come from nothing, and if you want something, you need to work for it. I love that, and I will 100% steal that idea when the time comes.
What we do for our three and five year old
My son made a comment to me one day that he wanted me to go back to work because he wanted more toys. He had been too rough with one of his and it broke, and the way he responded took me aback a bit. I clearly was not teaching him well and wanted him to learn that life isn’t just handed to us because we demand it.
That day, we had a long talk about how if he couldn’t look after his toys, then he would need to replace them himself. He had a long list of wants and so we talked about what each of those things would cost. At the end of our conversation he decided to start saving for three specific things and made a plan for how he would earn that money.
We then picked up the phone, and started calling friends and family to ask for their spare pop bottles to take to the bottle depo. He explained to them that he was now saving up for a trampoline and I helped him arrange a time to pick them up.
Together we went to the bottle depot where he learned how to sort the bottles from the cans, and how to take all the lids off. We have now been doing this for ever a year, and he has saved up $150. His three year old sister was so helpful at the depot that when she turned 3 they started splitting their earnings, and she already has $30 in her little stash.
Some other broad ideas that might work depending on your child’s age are:
- Send them out with a shovel, and have them help people with their driveways or business sidewalks
- mowing lawns
- paper route
- pet sitting
- dog walking
- vacuuming out and cleaning your/friend’s cars
- offering to do some baking (my friends little girl is amazing at this)
- going coin hunting through the couch cushions
- baby sitting
- poop scooping yards
- raking leaves
Set some savings goals together
Once your children are making a little bit of money, sit down with them and ask them what they would like to do with it. Ask them what they would like to be saving up their money for, if they are older it might be a car, or a college fund.
Since our children are little, they had savings goals like a remote control car, and a trampoline. It may help to find a way to visually track their progress, so they can see that they are getting closer to meeting their own goals.
This could be something like transferring beans from one jar to another, a little saving thermometer, or different tracking tool they could color in or check off. Heck, this still motivates me and I am in my mid thirties!
Allow them to handle cash
There are several ways for your kids to get money such as birthdays, allowance, chore commissions, or small age appropriate jobs. In this house if the kids want to use their money to buy something, I allow them to be the one to take it uptown, pick out their toy, and pay at the till.
If you are teaching your kids what the value of real money is, then allow them to actually see it, handle it, count it and spend it. I have seen lots of suggestions that include adding in a lot of play money and playing store… but how much more memorable is it to take them to a real store, and allow them to pay with real money?
Set up a piggy bank or bank account
Now that the kids have a way of earning money, they each have their own separate piggy bank. Every now and again we sit down and count it together and check how close we are to their goal amount for whatever toy it is they have chosen.
When there is something that the kids are wanting something just for them, like a happy meal instead of sharing one big meal, they ask to take it from their piggy banks.
As they grow, and have outgrown their glass jars, we will turn these into their own bank account with debit cards. When the time for debit cards has arrived, we will go through how to bank with them, including how to manage bank balances when its not easy to see.
Which leads to…
Let them spend their own money
How are kids supposed to know about the trade of cash for goods if we never let them do it? Or every time we go to buy them something they just see us pull out our debit cards to pay. Its okay to do that sometimes, but from time to time they need to be part of that transaction taking place.
Our kids use their own money for any fundraisers or giving at school or church, because I want to learn early how good it feels to having a giving and generous spirit.
My son’s school has a day where they bake enough goodies for the whole school, and then they sell the treats back to the students to fund raise for different charitable organizations. My son takes a good deal of pride in the fact that on school bake-sale days, he has enough to buy a little something for each one of us.
Its been such a cool thing to watch the kids, proud as can be, walk up to the till to pay for something using their “own monies!”
Its really helped to open up a space where they ask how much things are worth in dollar amounts. Its also been a really great lesson for them about quality vs quantity and how sometimes if we wait and spend our money on something of better quality, it will last much longer than the cheaply made dollar store toys.
How do you allow your kids to be part of your finances? Do they have an allowance or do you make them work for their money? I am curious to hear, let me know in the comments below.