Teaching Children the Value of Money

The fastest way to teach children the value of money is to give them money, and a lot of it. Don’t worry, we don’t give them a lot all at once, but we do give them a large allowance. They get the same amount of spending money per month as Ryan and I do. We’ve found ourselves in the position of being out of money, so we used credit, the more credit we used, the easier it was to use.  Pretty soon we had a large debt load that would have been avoided had we given ourselves permission to buy a few items here or there when we wanted them instead of going without for a long time, then needing many items all at once (and not being able to afford them).

That’s the secret. The big secret to saving money and becoming rich is spending money. The trick is making sure you don’t spend too much. I find it easiest to keep my spending within our budget by making sure I always give myself permission to buy something if I want it. That permission means I can choose not to buy something, and save that bit of my allowance for later. When later comes, I don’t feel deprived, so I don’t binge spend. Because I’ve been the one in control I feel content to only buy what I feel I really need. When we give our children the same amount of money as us, we also allow ourselves the freedom to say yes to whatever they want, as long as they have the money.

Another benefit is it gives them a tangible way of seeing how much money they have and easily compare it to how much they need, and seeing how long that takes to save.

Ella wanted some play sets to use with her American Girl dolls. She looked at similar style sets and realized they cost less money. A lot less money. She noted the type of materials the toys were made out of, and how sturdy they were built. In the end she decided it was better to wait longer to buy the American girl doll sets because she felt the craftsmanship was that much better than the competitors. Sometimes she’d express sadness that she didn’t have a set yet, so we’d talk about what she wanted and why she was waiting to buy.

She was able to explore her feelings and step away knowing she was the one in control of her money and when she decided to buy something, she knew she’d be happy.

This week I brought all four of my children to the mall 3 different days because they asked me to, they wanted to go shopping, but they each had a specific time in mind, and those items were only available at specific locations, each in very different areas of the next city over.

First, I brought Ella to the closest American Girl Boutique, she bought Samantha’s Ice Cream Parlor. The next day Cordelia wanted to buy an Ever After High doll set. And then today Brom wanted new Lego. Normally I don’t go out more than one day in a row. It doesn’t usually go very well if I do. I normally’d say no or wait, but I took a deep breath, thought about my reasons, gave myself a pep talk and loaded the children in the van.

By the end of each day I was completely wiped, but still managing to stay engaged without getting upset about little things. I kept telling myself I was bringing us closer to unforgettable. From the looks on our children’s faces I think I succeeded!

We find the large allowance also does double duty by teaching number sense, budget sense, and how to use charts. So many homeschool lessons rolled into one useful parenting tool! Yay!

They have their bank accounts, and we use ‘Numbers’ (an iOS app) to keep track of their money. It helps them make their decisions easier. More often than not Ella and Agatha choose not to buy something because they’ve been saving for something else and they can decide which is most important to them. Before we started giving them a working allowance they asked and asked all the time. Whether we said yes or no, it didn’t matter. Our decision seemed arbitrary to them. Now they understand what it means to have enough money to buy something, but deciding something else was more important instead.

The reason we give our children as much allowance as we get is because we know they have many large items they’d love to buy, and we want them to be able to quickly see their savings increase. As with adults, seeing a quick improvement in something reinforces the habit or routine. For them saving is easier when they have a lot. When they have very little, it’s easier to spend. Strange how that happens!

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