How to teach your kids money

When my girls were about three and a half and two, going to any store with them was a nightmare.  “I want this!”  “Mommy, buy me that!” How many times can you say “NO”. I was tied of being a bad guy. It was getting worse by the day.  I knew something had to be changed. I decided to expose them to the reality- everything cost money, and to get money you have to work.  Too early, you might say, may be…

One day, we were riding our bike and my girls saw a homeless man, sleeping under a bridge. “Mommy why is this man laying here?” “Honey, he lives here, this is his home.” “Why?” “Because he didn’t have money to pay his mortgage, so people took his house away and now he has to live here.”  Was it too much of harsh information, may be, but now, when I say I don’t have money to buy a toy, because I have to pay mortgage they don’t ask.

The best way to teach my kids that everything cost money and how much money, I make them earn their own money.  They do chores: cleaning their rooms, put the toys away, do their “homework”, fold their own laundry, clean and set up a table, for each of those, they get 10 cents.  They have a chore chart, where we mark what they did, and at the end of the week, get their cash.

At first, as soon as they got their money they wanted to go to Target.  Soon, they realized they can’t really buy much for 5 dollars in Target.  However, if they go to a Dollar store they can have five things with their five dollars.  The comparisson between two stores  taught them that some things are more expensive and some are less.

When we go somewhere, where I know I will have to buy them something, I give each of them a sum that I would want them to spend. I tell them that this is all the money they have and they can do what ever they want with it. When they have an actual money in their hand and they pay for their stuff, they physically know, when money are gone they can’t buy anything more. In the same time, if you tell them that they are allowed to spend, let’s say twenty dollars, but they can’t physically see it, it is harder for small children to understand the idea that there is no more money left.

Now when we go to the store it is fun. We turned our shopping nightmare into shopping math game, where they try to subtract from their original sum different items cost to see how much money they are going to have left.

My husband and I also tried to introduce the concept of saving to them.  This summer, my older daughter (she was 4.5) really wanted some toy that cost $35.  We told her that she has to do her chores for almost 2 months.  She said that it was too long and she wanted to come up with a different way to make money.  She had a lemonade stand.  She also drew some pictures and wanted to sell them to the people who were buying lemonade. Two weeks of saving plus the lemonade stand, provided her enough money to buy her thirty five dollar toy.

Today my kids know that daddy has to go to work to make money, because we need to pay for the mortgage, the car, all of their activities and food.  They also don’t ask me to buy them things all the time, because they know what money is.

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