Getting children to understand the concept of money

Jessica - posted on 02/01/2009

So has anyone read anything about the specifics of the allowance thing?  I've heard/read a few differing views on this.  The experts agree that the children have household chores to learn responsibility of being a family and pitching in.        The question is do you give an allowance regardless of these chores or contingent upon completing these chores.  I understand that extra money is earned through extra chores.

Kylie - posted on 02/01/2009

This may sound counter-productive, but may i suggest a small amount of pocket money? My daughters have to do their chores, (clean their room, unstack the dishwasher, clear & set the table) and in return they get a small allowance. when we go to the shops, I remind them to take their own money if they want something, you will find that they are more reluctant to spend it if they have had to earn it, and it helps them to understand the value of what you are giving them, and the concept of not quite having enough to get what they want sometimes. In time, the independence and understanding could be quite helpful. Its always worked for us, and we have 4 of them always wanting something!

Ginger - posted on 02/01/2009

My children also do chores, and they get paid once a week. 4 yr old get $1, 10 yr. old gets $10 ( she does a sugnificant amount of work ). They understand that the way you get money is to work. That's how it is with grown ups, right? They also give for church.

I buy them nothing when we go shopping ever (birthdays and christmas presents are an exception). If they want something I say, "do you have enough money for that?" If they do, they can spend it however they choose. It's interesting to watch them in their lessons with money. They blow it on candy,  but then regret it when they could have saved for something special. I compliment them when they make wise choices, but I never choose for them.The lessons they have learned have done enough.

We have still paid even during hard times. Explaining what is going on helps too. The amount raises as the child gets older and has added responsiblity. And by the way, they don't do their chores, or meet expectations, we have the option of not giving them anything.

Dawn - posted on 02/01/2009

Emily, Dave Ramsey got it for sure! heheh

Belinda, Daves theory is that kids need paid chores and helping the family chores. If they do not do the paid chores they get no money. From the money they do earn it goes to three envelopes. You save some, spend some and give some (tithe, charity, etc). This teaches kids to save for what they want.

I think all of these post will be helpful. Explain the situation, then if you can, make a chore list. Dave gives a dollar a chore with up to five chores. If you give less or even the fake money that works. I don't know if you live by a dollar store but my kids love it!

We have seen with our own kids how they spend "their" money different. Our ten year old and our eight year old pitched in together and saved until the could buy a wii.

Good luck.

P.s maybe they would like to help clip coupons to save money and get to share some of the difference of what you would have spent without their help?

Emily - posted on 02/01/2009

Give them a couple ways to earn some money, and then show them how to divide their earnings into 3 envelopes Save, Spend and Give.  Talk about the importance of each of them and just know that it will take a while... My kids always want money when we are out, too, but I have started doing this and it is showing... My 4 year old son has saved almost $10 so far and he will not spend it.... He is saving for a video game that he really wants.

You can keep the money they have earned in a CLEAR jar of some sort, so they can see it and watch their savings grow!  Hope that helps!

For more ideas and info, check out Dave Ramsey-- he has a great tool for teaching kids about money.

Laura - posted on 02/01/2009

What will speak volumes to them is your money habits!  Involve them in the family budget process....spend every penny with a purpose and if something comes up that doesn't meet the purposes you have prioritized, you don't spend it.  Have them earn some money...even if it is 'play money' until the real thing is more plentiful...if they want a privilege or special treat at home they have to 'pay for it' with their money(including taxes!) and teach them about 'investing/saving' their money and watching it become a powerful tool for them.  Wealthy people do not pay interest, they earn interest! 

Jodie - posted on 02/01/2009

Hi Belinda, I agree with Jennifer. It is important to communicate to your kids the current situation, let them know that it's not long term. You can also get them to hand the money over the counter at the shops and get the change. Before you go shopping, tell them have much you have to spend, when you get home, tell them how much you have left. All kids think money comes easily but if they can also see how easily it goes it can help them to understand how it really works. Good luck.

Jennifer - posted on 01/31/2009

Well, you can first just explain to them the situation when they ask for something or when money comes up in conversation. You can also play grocery store with them at home. This way you don't have to use real money to illustrate the value of the things we buy. Use monopoly money or make up your own version of some cash. Or use spare change and practice through play how to earn and spend money wisely. Make it fun and don't worry..they aren't going to completely get  it right away.