Teaching kids about money

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When it comes to valuable and worthy life lessons to pass on to your children, instilling the value of money is up there with eating your greens and remembering to say please and thank you. The only problem is that trying to explain money to a child is a bit like trying to explain algebra to a loaf of bread. It’s not that children are necessarily incapable of grasping the difference between a high end purchase (such as a car or a house) and more everyday purchases such as groceries, but they are woefully under-experienced in the world of work and they lack even the most entry level understanding on the topic of remuneration. To that end, they don’t grasp that money doesn’t grow on trees.

You could also face a greater task if trying to explain the basic concept of money to a child with learning difficulties or physical disabilities that affect learning – if you have been affected, check out a Phoenix based Cerebral Palsy lawyer for more information. Above all, we just want our children to develop a respect for money so that they won’t make silly decisions that result in relying on the bank of mum and dad. We want them to be independent. How can we do this? Let’s take a look.

Clear piggy banks only (a jar is fine)

 There’s an old saying that goes ‘out of sight, out of mind’. And never is that more true than when it comes to kids and money. If they can’t see it, they don’t think about it. That’s why you can buy brand new clothes for children (and they can be present when handing over the cash in the store and they can see how much things cost), and they will say thank you, and then they will run straight to the nearest patch of mud and cover themselves in muck. They don’t have the mental capacity to keep in mind concepts such as money once their attention is directed onto something else.

That’s why you need a clear jar or piggy bank (see examples). The repetition of seeing their savings on the shelf everyday will help to drive home the fact that money is finite and isn’t necessarily replenished every day.

Switch from an allowance to a commission

Do you know the average salary that car sales-people can expect to take home per year? It’s buttons. Almost nothing. Very little gets paid in salary. And yet, good sales-people make a small fortune. How? Why? Commission. That’s how and why. They earn a percentage of every sale – it adds up, and they’re driven to sell more.

That’s why you should switch from giving your child an obligatory unearned allowance to paying them a set rate for task completion. Chores could involve washing the car, washing the dog, cleaning their room, putting the dishes away from the dishwasher, and mowing the lawn. Basically, whatever you can think of that you don’t want to do around the home becomes a way for your child to earn pocket money.