6 Strategies for Teaching Children the Value of Money

There are two very important reasons why parents today must put effort into teaching their children about the value of money.

1. Society teaches plenty about the pleasures that money provides but little about what it takes to earn it and use it responsibly.

2. If you do not teach your kids what it takes to earn and manage money wisely, the world will teach them and the lesson will be much harder once they are on their own with no safety net to fall back on.

Below are a few of the strategies my wife and I have used to teach our kids about the value of money:

1. Give allowance as early as 7 years old but tie it to the contributions they make to the family. My kids have each received a small allowance starting at age seven. But along with the allowance have come responsibilities to the family. These start out as simple chores such as emptying the trash, cleaning their rooms or doing the dishes, but evolve into more complex work such as baby sitting siblings, lawn work, preparing meals, etc. As the complexity of the work increases, their allowance increases.

2. Teach them to save. Kids love to watch their money grow. Start early with a piggy bank, then open a savings account for each child. Compliment them for saving. Help them to set savings goals and when they reach them, rewarded them with a special purchase where you match their contribution.

3. If kids are careless with their gifts - do not replace them. Early on, my kids are taught to take care of their things. We place special emphasis on items of high value such as computers and video games. If they damage or lose an expensive item due to carelessness, it is not replaced. They must earn the money to replace it either through allowance or through work outside the home.

4. Teach kids to give some of what they earn to charity. One important way to gain appreciation for money is to give it away to those who need it more. We expect our children to be generous with what they have. We let them see mom and dad donate to charities and ask them to do the same. Most kids get a great sense of satisfaction in giving to the poor and this can become a habit that stays with them for life.

5. Avoid comparisons to other families about money. Kids love to keep score. Avoid talking about whether you make more or less than your neighbors or relatives. Teach kids that what's most important is that you earn the money your family needs to provide for their well being and enjoy some of the comforts of life. Focus on money as a blessing that requires sacrifice and does not make us any better or worse people in and of itself.

6. Encourage your kids to get jobs - especially during the summer. If your kids are motivated, you may have to keep them from overdoing the amount of work they take on. However, most kids need to be nudged into taking on a job. Babysitting and lawn work both have good hours, provide decent pay and develop skills they will use later in life.

Through these simple techniques you can teach your kids about what it takes to earn money and heighten their appreciation of it and the benefits it provides the family.