Teaching Kids The Value Of Money

It is becoming increasingly difficult to show our kids the value of money.  Money is more confusing than it used to be.  Kids see the exchange of plastic or numbers being typed onto a screen and it can be misleading.

Kids see paper and coins from time to time but not very often.  They are taught at school that 2 quarters and a dime is sixty cents or that 2 tens make a twenty but with so many transactions being conducted digitally, the relative value is lost.

Instead of an iPad costing $600 which would be a lot of cash, 30 twenties, all they see is 1 swipe of plastic into the machine and voila, they have an iPad!  This is very likely confusing and without any explanation, kids lose respect for how much things cost.

Parents need make sure kids understand what things cost and the easiest way is to put it in relative terms.  This iPad cost the same as 600 songs or games on iTunes, a new game every day for a year and a half, wow, you will be 9 years old by then!

Older kids can be taught real world lessons.  Let them pay for their cell phone out of an allowance or from money they have earned.  Let them fail occasionally at managing money too because it's better to learn a hard lesson as a teenager than as an adult!

Help Kids Learn Difference Between Needs, Wants & Wishes

You probably do a great job as a parent teaching your kids about making good choices.

Do you talk about good and bad choices as it relates to money?

The best way to teach young kids especially to make good choices is to offer two (only two) choices and hopefully they will make the correct choice but the wrong choice isn't a time for scolding, its a time for learning - a teachable moment.

You cannot start too early discussing the difference between needs, wants and wishes.  This on-going discussion will prepare them for making good spending decisions in the future.

In the book, "How To Teach Your Kids About Saving, Debt and Investing", I outline what I believe are needs, wants and wishes.