One of my goals as a parent is to raise my children to be aware of the value of money and as they age to develop healthy financial habits. I have had friends ask my advice on this and have seen social media posts from parents of young children asking for input. The hardest part of this is just like everything else in parenting, you will need to find what works for your family and for your children or the children in your life. We are so excited we have become a Sammy Rabbit official partner and have been able to bring Sammy’s Dream Big story program to you! This is geared towards children ages 7-10 and is a storybook coloring book and activities to teach financial literacy.
I had a specific experience that really impacted me and has made this issue important to me. I was working a merchandise stand for an organization that had a special event for 3rd-6th graders. The kids had come with money they were anxious to spend, but it quickly became apparent that a simple understanding of the value of money was missing. They might have brought ten dollars and asked for a more expensive item like a performance wear sweatshirt, when I said the price they would be flabbergasted that things could cost that much. It was across the board obvious these children had no concept of the monetary value of things, how much they should cost. Quite literally I had three children state they thought a postcard and a hat would cost the same. The other thing I saw happen was the child would find something in their price range (after they asked me if they had enough) and then just throw all their money at me to figure out, and many many times didn’t know they had change coming back or didn’t wait for it and I was chasing them down with money.
So what are some things you can do to work on awareness and behaviors over time? Here are a few thoughts.
Let children regularly pay for items. This is something that can be started with very young children and I’d recommend keeping the transaction to one or two items. This helps them connect in their head that you don’t get an item unless you pay for it, and starts to build awareness of values. Let’s use a matchbox car as an example with a price of $1.42 after tax. The child will hear the total, have to give the cashier 2 one dollar bills, and wait for the change back. When they are learning about money children need to use actual physical money to build that bridge in understanding, a debit/credit card does not provide that mental connection.
Discuss prices. When you are shopping don’t be afraid to point out prices. My kids love weighing and printing the labels for produce, I like that it saves me a step but more so that they see the price on that sticker as they print it. Sometimes I even hear the comment of “I didn’t know those cost so much!” or “wow, those are pretty cheap.” Those are the moments you are building toward. Side note: a small bag of bulk candy costs much more than a bag full of bananas, that is a visual learning lesson on multiple levels. This can be done with everything you shop for. If you are buying new winter hats, mention the price of several items you are comparing and maybe talk about brand and quality, point out menu items with the associated cost, repeat out loud the price of a movie ticket. This will not be something that turns into immediate results, but over time will help children really understand what price means and develop that internal calculator of value.
Have children manage their own money. There are many schools of thought over giving children money and many resources out there. Allowance, earnings, gifts wherever the money is coming from allowing them to have some spending money to manage is important. You can absolutely still guide them and have ultimate veto power over their purchases. As there are things they want to purchase they will need to learn: how much it costs, how much they will need to save for it and how long it will take to get that. If they are of an age where they are earning money for work they will need to think how long they will have to work to make that much. We made a decision a few years ago to give our children a certain amount of money each week to manage, but the condition was they had to pay for their wants. I was tired of the “can we get this,” “I want that,” and “Why can’t I have this” whining when we shopped and I was really struggling with how to make them understand. For my children this has worked really well. Those whiny questions happen rarely now and the number of items coming into my house to be played with once and set aside has gone down because they are really thinking through their purchases and how much they will value that. I’ve been excited to see them stop and look at a price and the item and make a thoughtful decision. They’ve also been more motivated to go above and beyond to find ways to earn money now that they are learning how much items cost and how long it takes to save.
As I said in the beginning each child and family will be different in how they learn and teach, but start with small things and see where it takes you. I think so many people are afraid to talk about money with their kids or don’t know when or how to start. I encourage you to just start, wherever you’re at, and build that financial literacy foundation with them.