Teaching Children about Money

Both money and children need to be seen and heard: Valuable lessons are learned when parents talk to their children about money and its value. An important first lesson for children is in denying them every want and instead showing them that needs come first.

At an early age, rather than tell children you can’t afford a toy, a new pair of shoes, or some other item they’re loudly demanding while on a shopping trip, explain to them quietly and calmly if you buy them this expensive item, there will be no money to buy food for dinner.

Little by little, and in those times when they’re not having a tantrum about being denied an item, explain the value of money to them. If they have little hearts set on a particular item, have them save up money their allowance toward purchasing it. This will not only make the toy or game more valuable to them, it will be their first investment.

Family Education has excellent lesson plans on how to teach your child about finances. They suggest: don’t just give and give to them without teaching them a few hard facts about how money is earned. Otherwise, if money grew on trees, why would Mom and Dad have to go to work?

Of course these lessons are to be made age appropriate and should be ongoing. When they’ve grasped one idea, move on up to the next one. By the time they’re ready to start taking driving lesson, which you might have to finance, they’ll be making plans on how to acquire their first car.

Terminology relating to public spending as well as discussions on the economy should be ongoing. Unemployment, depression, recession, and even the story of how the bull and bear markets came to be will be enduring life lessons on how to buy and sell.

“The terms “bear” and “bull” are thought to derive from the way in which each animal attacks its opponents. That is, a bull will thrust its horns up into the air, while a bear will swipe down. These actions were then related metaphorically to the movement of a market: if the trend was up, it was considered a bull market; if the trend was down, it was a bear market.”

Don’t sell an item before it’s you own it is the actual meaning of this animal fable. In other words, a ten year old future farmer will know not to attempt to sell his whole cucumber crop to grandma before harvest time. As the legend goes, speculators or “bears” once did this.

Of course there’s no need to load the children down with fear about the cost of living before they’re old enough to grasp its importance, but an introduction is certainly in order. Moderation is the key word in finances and in lesson on such for children. Both misers and spendthrifts may well have had their first lesson, or lack thereof, in childhood.

Counting money and knowing how many US pennies it takes to make a dollar or the equivalent in other currencies is a tangible way of having children get the feel for real money.  And too, explaining how banks works and show examples of borrowing and lending and interest payments will put youngsters ahead of the money market game. They’ll learn early what’s real and what’s not real when buying and selling.