Teaching Your Kids About Money

Teaching Your Kids About Money

One of the most important concerns any parent should take into consideration: What we teach our children, and how we prepare them to face the “real world.”

how to teach your child the value of money

Teach your kid about money

How to teach your child the value of money?

One of the most important concerns any parent should take into consideration: What we teach our children, and how we prepare them to face the “real world.”


Being a provider is just a means to an end. Our primary job as parents is to prepare our children for the world. The worst thing that we could do to our children is to over-indulge them. In the real world, we don’t always get what we want. No amount of crying or tantrums could help us get what we want, change things the way we want them to be, or make the world come running to appease us when we break down.

The notion that we are sending our children to school—the thought that we are showing them enough love—usually make us believe that we are doing enough in bringing them up to grow as happy and contented adults.

Teaching our kids about money and about “the ways of the world” is just about the most important lessons in life we can impart.

And I assure you, it’s never going to be easy.


We may teach our children the best financial lessons in life, but it is our actions that speak louder. If we seem to be out working most of the time and still have nothing real to show for it (financial security, savings) then they’ll be programmed with that lopsided message.

Is our weekend “quality time” with our kids mostly spent in malls splurging on the latest gadgets or signature clothes and anything in between? If your idea of bonding is centered around material goods, you are teaching them a very bad lesson.

Be careful that they may think that healing emotional problems can be done by a trip to the mall.

Do you feel guilty because your work keeps you away from your kids so you give them all the material things you can afford to make yourself feel better?


Make sure your children understand that you do not make yourself great by wearing the most expensive signature clothes, the latest toy or gadget, or the latest car model. Intelligence, creativity, caring, integrity, ethics, etc. are the defining values that really measure a person’s real worth.

If your child idolizes Hannah Montana or any other celebrity, ask her or him why? Is it because of her perceived fame and fortune, or is it because of the values she shows as a good and disciplined daughter? If you spend more time with your child, you can see whether he/she idolizes a celebrity because of the good life the celebrity lives or because of the values the celebrity personifies.


Ever heard of the “marshmallow test?” This is a test where a child who loves marshmallows is given one. He’s told that he can eat it right away, or if he waits a little longer before eating it, another marshmallow will be added.

Can they understand the concept of self-restraint? Deferred gratification or delayed gratification is the person’s ability to wait in order to obtain something that one wants. Wikipedia says this personality trait or ability is important for life success. Instil in their minds the value of saving against spending


As soon as they can count, introduce them to money, how to count them by the denomination, how to save, how to take responsibility for what they spend and to make them understand that money is just a tool (but needs to be properly managed) and not the ultimate end.

1. Give them an allowance

Nothing spectacular at first.. just a couple of dollars per week or month. You can start with “spending money”—money they can spend on whatever they like (candies, marbles, etc.) This will be a very good first step to monitor and guide them on how they spend their money.

You can eventually increase the allowance to include daily school fare and snacks. At first, you will be met with frustrating over-spending or un-allocated purchases. This is a good time to start instilling discipline. When applicable, do not bail them out if they get overdrawn because of irresponsible spending. It will be a good chance for them to appreciate consequences and to be more responsible in spending.

When they get older, you may want them to present a liquidation report before they can replenish their allowance. This is a good measure to teach them basic financial recording. Nothing could be worse than not knowing where your money went.

2. Difference between wants and needs

Teach them the difference between wants and needs. Even adults make bad spending habits because they forget to differentiate between what they really need and what they want.

3. Teach them about the values of savings.

You may influence them to save a couple of cents per week and reward them by putting in an equal amount per money saved (this teaches them about interests).

4. Teach them the value of earning.

This could be one of the most important things you could teach your child. On top of their usual allowance, you may ask them to do some tasks that are outside of what they usually do at home for a fee. However, be careful lest your children forget about the value of working for the sake of helping without expecting anything. It’s a tricky line you have to tread.

5. Warn them about debts.

Unnecessary and unmanaged debts are like quicksand that can lead anyone to financial disaster.

There is no better time and better way to help your kids get on the right track than teaching them about money as early as you can.

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