Teaching Kids about Money

Has this ever happened to you?  Our family was in Target today, doing some back-to-school shopping when my almost 4 year old said he really, really, REALLY wanted that toy.  

Toys are like candy for this guy.  He absolutely loves them, and is constantly asking for a new toy from the toy “schtore”. Sadly, the newness of the latest acquisition lasts about as long as candy lasts around me. 

When my daughter was the same age, she insisted we “Could just go to the bank machine to get more money.”  The teacher in me awoke at this opportunity.  And I treated her to a diatribe on how we get money, the value of work, saving our dollars and only spending money you have.  Is it good that she walked away with eyes glazed over?

So how will our kids learn about the value of money?  Who will teach them about how to handle their dollars?

My wife and I asked this recently as we drove back from a trip.  We remembered a practice we’d learned in Dave Ramsey’s Financial Peace course.  We used this a few years ago, but sadly had let it lapse.

It works like this

Each child has three jars, or boxes. 

            One for saving for the future,

                        One for sharing with those in need, and

                                    One for spending now.

Then each week they do some chores around the house.  In a wonderful twist, I have a child who actually asks to clean the toilets. These chores can’t be things like keeping their rooms clean, or helping to clear the table.  We all do some things just because we’re part of the family.  Instead, the jobs are a chance for our children to learn the value of earning their money.  After all, that’s how the real world works and in the words of Dr. Phil, “we’re raising adults.”

At the end of each week, we pay them for chores completed. We usually pay in small coins so that the children can place some coins in their save, some in their share and some in their spend jars.  They decide how much goes in each.  We just help them remember that each jar needs some of the money each week.

As they grow up, we hope these three categories will be a natural way to think about their money.

Now my wife is far more creative than I.  When we decided to resurrect this approach to teaching our children about money, she broke out the scrapbooking papers, stickers and stamps.  The kids decorated their own boxes.  We talked with them about the jobs they’d like to do.  We even chipped in some coins to get the funds started.  Yeah, I have a soft spot for those kids.

Today, when my little guy said he really, really, REALLY wanted that toy at Target, I was able to say to him, “OK, save up your spend money and you can have it,” and that settled it.

That’s what’s working around our home.  What’s working around yours?