Paul is a active parent who believes in 100% equal involvement without defined parenting duties.
When is the right time to start teaching children about money? This questions pops into many parents’ minds at some point. Some parents give their kids an allowance with no work necessary. Other parents offer an allowance in exchange for chores. And some parents ask their kids to do chores without getting paid for it. So, which option is the most effective for helping children learn the value of money?
My wife and I started saving some money for our daughter’s future just after she was born. But, as I’ve watched that account grow in value, I've started thinking how much of a waste it would be for her to blow it on something that “I thought” would be ridiculous. Everyone has the right to spend their money on whatever they want. But wouldn’t it be a waste if years of savings weren’t used for something worthwhile?
How Do You Start Teaching About Money?
Children can start learning to count as soon as you’re ready to take the time. You can use fingers, toys, food, or pretty much anything to teach them. As soon as my daughter could count, I started showing her money. Whether it was counting yen when we were in Japan or dollars when we were in the U.S., it didn’t take long for her to realize that we use those bills and coins to buy things. And then the wheels started turning: What’s the easiest and quickest way to get what I want?
Kids Will Test Your Limits Early
It may take a year or two for babies to learn to string together a couple of words, but they’ll use those few words as effectively as possible. For some strange reason, they usually focus on commanding the people closest to them. It starts with a simple “Mama” or “Papa.” Next come some simple nouns like “bottle,” “milk,” “pee-pee,” or “car.” Then comes the psychological power shift.
They start using simple phrases like “Take it,” “Pick me up,” and “Buy it,” but there’s more to it. Sometime during those critical early months and years when there is a necessary dependence on us for survival, the child’s behavior towards people transitions into attempts to see just how high we’ll jump when they say “Jump,” metaphorically speaking. Children can tell much quicker than adults just how much they can get away with from different people.
When we are at their beck and call for everything, it’s the start of a vicious cycle that can dictate their lives. In particular, this translates to their financial future. If a child says “Buy it” and we get into the habit of buying anything and everything on their terms, it’s almost as if we’re a human bank. So, it’s important to shut them down on this direct approach. And it definitely will not be a “one and done” deal. Children are persistent, and you will have to be persistent as well.
The following are the ways I tried to introduce chores and money to my daughter and how successful or unsuccessful each experiment was.
First Experiment: Chores for Money, Then Shopping
When my daughter was 4 or 5 years old, I thought I’d let her try earning money and feel the joy of spending some of it as a reward for her hard work. We would have her do things like sweep the entrance, make her bed, clean her room, take out the trash, organize everyone’s shoes, or a few other things. There’s always lots of things to been done around the house, so I’d let her pick 4 things and give her 50 yen (about 50 cents) for each chore.
Save Half and Spend Half
The reason I chose 4 chores (or $2 worth) is that I told her she had to save half of the money, and she could spend the other half. So, that comes to 100 yen, or $1, in her bank that she can’t touch and $1 to spend. After she finished and I paid her, she would always have to say, “I appreciate it.”
Then we’d be off to the 100 yen shop, like The Dollar Store in America. She would have to really think about what she wanted, since she could only buy one thing. It would usually come down to either nail polish or stickers.
She started looking forward to the weekends so she could do chores and go shopping. She started accumulating an assortment of nail polish colors and was getting burnt out on stickers, so I told her she could just save the money and buy something better when she'd saved up more. That’s when I recognized what I didn’t want: My daughter was becoming a shopaholic at the age of five.
Then I made the decision to stop not only paying her for chores, but also to stop letting her do chores altogether. And no more weekend trips to the 100 yen shop. To break the habit, we started bicycling or having BBQs on the weekend. She had completely associated working with spending money, even though she was saving half of it.
Second Experiment: No Chores and No Shopping, Just Fun Times
I somehow had to disassociate doing chores with shopping (my daughter’s “fun time”). So we started just having fun without chores, without shopping, and without any kind of monetary exchange. My daughter and I used our weekends as “party time.”
We’d bicycle around with our binoculars to look for birds, ride a train to go to a park or karaoke, or have a BBQ. We started picking up other people’s trash on our bicycle rides, looking for fish in the river, working in the garden together, camping, and lots of other free activities. In no time, my daughter forgot all about her shopping sprees and we had some super fun, no-obligation father-daughter time together.
Third Experiment: Unpaid Chores and Fun Times
After lots of fun father-daughter weekends, we decided to get back to work around the house. When she turned 7 years old, she seemed to finally understand that we weren’t just going to hand her money or buy anything she wants. We got her in the routine of cleaning her room, folding laundry, sweeping, and doing some other small chores without giving her any money. This time I started rewarding her with the fun things that we had been doing all along.
If she finished cleaning her room and did all of her homework, we would go for a bike ride. If she’d get up, get ready for school, and make her bed without any hassle for the whole week, we would go camping that weekend. I started bribing her with fun things that I was planning to do with her anyway. It didn’t take long for her to do these thing without having to be asked.
We Try to Demonstrate Good Money Skills
Every now and then she says she can’t wait to work so she can have her own money, but she’s completely given up on asking for money. She’s learned that if she wants money, she’ll have to work on her own when she’s old enough. But, now she really watches my wife's and my spending habits. I can see the look in eye when we buys things. But it’s up to me to make sure the things I buy are “needs” AND let her know that it’s something we need. When she questions things or asks if we can buy something, I usually tell her that we can only spend money on:
Responsible Parents Help Nurture Responsible Kids
If you want your child to be responsible with money, YOU have to be responsible with money too. If you spend money carelessly in front of them, there’s a good chance that they’ll probably do the same when they have the opportunity. I’m not saying that you should never go to Chick-fil-a or McDonald’s or not to ever buy your child a toy. Just don’t make careless spending habitual, especially in front of your child.
And, when you do buy things that are “wants”, try to work it into your child’s life as a reward for a certain behavior that you expect from them (i.e., going to morning McDonald’s after they clean their room, go to the candy shop if they’ve done well in sports or on a test, etc.).
I think that the best way to teach your child the value of money is to:
- Talk to them about “wants” versus “needs”. You can even have them make a list of things that they think are “wants” and “needs” or discuss it as you walk through shopping centers and grocery stores. Be ready to answer lots of questions, especially things like why candy isn’t a “need”.
- Be a good role model. This is a very, very important thing as they’ll watch our habits more than listening to what we say. One of the best ways to get child to do or learn something is to do it yourself. When children see their most trusted people do something, they’re more inclined to do it.
© 2020 Paul Ledford
Paul Ledford (author) from Japan on February 01, 2020:
Thanks JC. Still trying to figure things out.
JC Scull from Gainesville, Florida on February 01, 2020: