Everyday Money Lessons for Kids
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One of the best ways to teach your children good skills in appreciating and managing money is through example and daily life experiences.
A good age to start teaching your children about understanding the value of money is when they are around seven years old. At this age, real-life examples can help children to understand why certain things have greater monetary value than other things.
A trip to the supermarket is a great way to teach kids about the value of money. Start by showing them how much an apple costs. Then compare that to how much laundry detergent costs.
Explain to your children what goes into making an apple (seeds, harvesting, Nature!) and what goes into making laundry detergent (chemicals, processing, packaging). By explaining what goes into producing different products your kids will start to appreciate the value of different items in the marketplace.
You can even explain to your kids the value different services have in the marketplace. On your next visit to the dentist, explain to your child all that the dentist does and then let her know the cost of those services.
Compare how much your dentist charges to clean your child’s teeth in one hour (say $200) to how much you might pay for someone to clean your home over five hours. Your cleaning service may be paid the same amount as your dentist even though the individual involved in cleaning your home may have to work five times as long to earn the same amount of money.
This service example teaches your child to understand not just the value of money but the value of different types of services and certain expertise. They will learn that the marketplace places greater value on skills that require greater training, experience and accreditation.
You can also teach your kids a little bit about major purchases and how depending on the cost of an item people can choose to pay for certain things over a length of time. For instance, it would be very natural for your child to ask how much you paid for your house.
If you have a mortgage you can begin to explain the concept of responsible credit to your child. Just as children can save their allowance money over weeks or months to purchase desired items, adults can pay for big ticket items over several months or years if their bank or lending institution decides to loan them that money.
Of course you’ll want to say that decisions like this are not made lightly and that purchasing on credit is very different from saving your own money. You can explain that it is done only for convenience when the item is very necessary – like a home – but costing more than what most people have in cash or would be able to save over a shorter period of time.
Don’t overburden your children with these life lessons, but explain whenever possible and appropriate how and why you make certain purchases around the home. By doing this, your children will learn to appreciate the value of money and what it can do in their lives.
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