Teach Your Child the Value of a Dollar
Kids catch onto the importance of money in life pretty quickly as they watch us use it. The way to show your child the value of a dollar is by teaching them the different ways a dollar is used.
Begin When They're Young
Start showing your child at a young age how money works. It's imperative for kids to learn that money is something that is earned. They need to understand that the products or services we need in life are provided in exchange for money, and the value or worth of what is being sold is up to the seller to determine. There is no way to purchase an item or service when you don't have money
A follow-up to this is talking about saving money. A child with a couple dollars could go buy a piece of candy (that'll be gone in 10 seconds) or an inexpensive toy (that will be broken in 10 minutes or completely forgot about the next day). However, if that child decides to save those dollars, a better item can be purchased that may have more meaning and last longer.
Have A Savings Plan
To develop a savings plan, help them decide on a percentage they can save each time they earn money. Ten percent is a good amount to work with since all they have to do is move the decimal point one place to the left. That will help them to see that for every dollar they earn, ten cents can be saved. You can also show the other examples too.
Make sure that they know that the account is not for toy that will last longer than the cheap one, but it is to be used for emergencies or to get somethinge like a car. It should make them happy to know that with the other 90% they can get the candy or the toy they really want. Teaching this principle is the perfect way to teach about discipline and long-term savings.
You already know that a six year old could really care less about saving for an emergency or even driving a car, but they will be able to see that saving ten percent over the years adds up. This teaching is a good for when they get their first job because they will already know about putting some money to the side.
You might also set aside a certain percentage for charitable giving, so kids can also learn about this important aspect of managing money.
As Your Child Grows
When your child is more mature, take him or her to the bank with you and open a line of savings in their (and your) name. Once or twice a month, take your child to the bank so they can deposit their money into their account. Let them see the bank statement and watch how their money is growing with the help of interest.
Interest is a huge part of using money. Either it'll make you pay more than what your item was originally worth (credit) or it can help you make more money. Teenagers need to understand that unless you can pay off that debt within 30 days, you'll actually be paying more for your purchased item.
One of the best ways to teach about how good or bad interest can be is by role-playing. You can find an item your teenager wants to pay for with a credit card as an example. Make a chart showing that by only making the minimum payment, it will take longer and cost more because of interest.
Then you can take that same amount of months it will take to pay it off and compare the interest they pay with the interest they could earn if they save money for the item. While the interest earned won't be much, your goal is to show them that if they save money to purchase the item, they will only have to pay the cost of the item plus tax, but they won't pay any interest.
The goal of teaching how money works is to get children to hopefully see the importance of responsibility when making decisions about money.
Begin When They're Young
Start showing your child at a young age how money works. It's imperative for kids to learn that money is something that is earned. They need to understand that the products or services we need in life are provided in exchange for money, and the value or worth of what is being sold is up to the seller to determine. There is no way to purchase an item or service when you don't have money
A follow-up to this is talking about saving money. A child with a couple dollars could go buy a piece of candy (that'll be gone in 10 seconds) or an inexpensive toy (that will be broken in 10 minutes or completely forgot about the next day). However, if that child decides to save those dollars, a better item can be purchased that may have more meaning and last longer.
Have A Savings Plan
To develop a savings plan, help them decide on a percentage they can save each time they earn money. Ten percent is a good amount to work with since all they have to do is move the decimal point one place to the left. That will help them to see that for every dollar they earn, ten cents can be saved. You can also show the other examples too.
Make sure that they know that the account is not for toy that will last longer than the cheap one, but it is to be used for emergencies or to get somethinge like a car. It should make them happy to know that with the other 90% they can get the candy or the toy they really want. Teaching this principle is the perfect way to teach about discipline and long-term savings.
You already know that a six year old could really care less about saving for an emergency or even driving a car, but they will be able to see that saving ten percent over the years adds up. This teaching is a good for when they get their first job because they will already know about putting some money to the side.
You might also set aside a certain percentage for charitable giving, so kids can also learn about this important aspect of managing money.
As Your Child Grows
When your child is more mature, take him or her to the bank with you and open a line of savings in their (and your) name. Once or twice a month, take your child to the bank so they can deposit their money into their account. Let them see the bank statement and watch how their money is growing with the help of interest.
Interest is a huge part of using money. Either it'll make you pay more than what your item was originally worth (credit) or it can help you make more money. Teenagers need to understand that unless you can pay off that debt within 30 days, you'll actually be paying more for your purchased item.
One of the best ways to teach about how good or bad interest can be is by role-playing. You can find an item your teenager wants to pay for with a credit card as an example. Make a chart showing that by only making the minimum payment, it will take longer and cost more because of interest.
Then you can take that same amount of months it will take to pay it off and compare the interest they pay with the interest they could earn if they save money for the item. While the interest earned won't be much, your goal is to show them that if they save money to purchase the item, they will only have to pay the cost of the item plus tax, but they won't pay any interest.
The goal of teaching how money works is to get children to hopefully see the importance of responsibility when making decisions about money.
About the Author:
Laura Nelson-Smith is the resident editor of Career & Finance at http://www.Schmoozins.com - an online magazine for women that gives all women a voice. Join us as a contributor, schmoozer or just hang out a while.
posted by Credit Counseling at
8:08 AM
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