Friday, December 2, 2011

How to Teach the Value of the Dollar to Kids

Money management is the key to being successful.  It doesn’t matter if you make $25K or $250K a year.  But how do you instill these skills into your kids?  How do you make them realize just how much work goes into each dollar that goes away, and that the new video game they want with a price tag of $50 is actually a “big purchase”?  Here is one possible way to handle it...

With our oldest, we are trying a lot of tactics to get this through to him.  He has very expensive tastes, but they aren’t far from the average “tween.”  Video games, movies, and other expensive interests seem to rule his world.  When he gets a gift card for a store as a present (or any money), it burns a hole in his pocket.  Now, being who I am, I love gadgets and other stuff as well, so I know this feeling. I have had to learn the hard way in the past, and I am trying to get him to learn without the “growing pains” I had.  Here are a couple of possible ideas….

  • Have him sit in and see just how much goes to help the family get day-to-day expenses paid. Show your child the power bill, cable bill, how much groceries are, etc. 
  • Price out a trip to the movies for the family, right down to the popcorn.  Show them just how much of the family’s budget goes poof for a 2-hour trip to the cinema. 
  • Take your child shopping at the grocery store, and show them what the food portion of the budget goes to. See if maybe they can help plan meals that are within a specific budget, to get them thinking of concepts like the price per serving.
  • Have them make a wish list.  Then have them prioritize it, and use the web or go to a store to get the pricing for these items.  Assuming your kids have an allowance, it will make them aware that once money is gone, it is gone. 
  • Have them take over the costs of some of their interests.  If they want that amazing new video game, maybe have them pay some or all of the cost.   The goal there is not for you to save money, but to have your child start to take responsibility for their own money. 

These are just some ideas to help make your child aware of what things cost.  Once that gets through to them, they can start making choices and saving money as well.  Not just for items they want, but for the future.

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