5 Subtle Tips To Educate Children About Money

Summary – 5 tips to educate children about money

Every now and then a reader will send me a question for me to write a post on. A few weeks ago, Zakiah had requested our help in her comment to the article (One Sentence That Will Flood Your House With Stuff). She would like to know how to control her daughter’s bad spending habits. Currently they go out every week and will end up buying new clothes every time.

Educating children is definitely a work not for the faint-hearted. You will need to read a lot and ultimately to be familiar with the most updated techniques available. In addition to that you will need to modify the technique accordingly because every child is different. All these will be 10 times harder when it comes to educating teenagers. I know, I’ve been there.

Listed below are some tips you can use to kickstart that subtle course of valuing money.

1) Spending money to value money

Parenting expert are debating on this. Some of them believe that encouraging the child to save money is the best way to teach them about money. Another team of expert believe that the children will value money more if they are allowed to enjoy what they have saved.

I tend to agree with the latter. Encourage the children to save, but do not stop them from spending the money. Since they can’t spend what they don’t have, they will learn better about valuing money this way.

2) Use their shopping habits to your advantage.

If they like shopping, bring them shopping. Give themselves a budget of about $100 each and just when they were about to buy clothes that cost about $100, try to persuade them to check out other store. Highlight to them other clothes that cost slightly more expensive.

Now they have to choose whether spending the money they have now for cheap $100 clothes, or they can return home and save for a few more weeks for that more expensive clothes.

I know, this may sound counter productive. We want them to stop buying clothes instead of encouraging them buying. But believe me, in the long run, they will start to have that mindset of saving for a better thing. And when they start to think for their future, they will be more open to other money saving ideas.

3) Start a money saving competition

Announce a money saving competition to your children. Who ever can save the most will get their money doubled. The losers get nothing. You should make this as exciting as possible. A few points you need to know –

  • Make it a one year long saving competition. Who ever save the most money in a year will get his/her money doubled. One year should be long enough to have a permanent impact in the children’s mind.
  • Set up mini competition monthly. For example, who ever save the most in one month will get 100 points. The person with the most points collected in one year will be given another prize. This is to keep the excitement up through out the one year long competition.
  • Maybe create task (money saving wise) that will give out more points.
  • Put up ranking board to remind the children of the competition.
  • The secret is to make it as exciting as possible without making it too complicated.

4) Give them an inspiration

Try to find a real life inspiration when it comes to money saving. You may have a relative who is a successful man and let him share the story of his success to the children. He must be a good storyteller. We don’t want them to be afraid of saving money now do we? Rehearse the story with him, and give him pointers on what to stress and what need not to. You know your daughters better right?

5) The ground rule of educating children about money

  • Make it as subtle as possible. Children especially teenagers don’t respond well to a formal teaching.
  • Keep the process exciting, more exciting that shopping.
  • Help them visualize the high end target. For example, involve them in discussion to buy an expensive house. Ask them for help calculating the interest and monthly payment.
  • You must have a clear policy on when to give money to the girls. For example, they are only given a pocket money of $300 per month. If they want more, they will have to wait for next month.

– I wonder –
Any other tips you guys might want to share about educating children about money?

————- Personal Note ————–
I was 10 years old if I’m not mistaken. And I had saved about $40 in my piggy bank (It’s the shape of an elephant really). I know because I keep track of how much money I have.

One day, my father’s friend came over and I accidentally broke / scratch his helmet. My father then made me pay for the damage and I paid for it cryingly. I think that must be one of the experience that greatly taught me about valuing money.

Photo Credit – Kevin

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This post has 6 comments.


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  1. 02 Dec 08 12:06 am

    I used to get pocket money – a fixed amount for buying gifts, entertainment, outside food etc. It was always a challenge to manage everything in that amount and fun too. Learnt a lot about budgeting, planning, saving etc because of this.
    My parents discuss investing options with me – this helped me stay aware of available investing options and their pros and cons.

  2. 03 Dec 08 5:57 pm

    My best advice: be a great role model for your kids. Don’t shop too much, be frugal, save, keep track of your finances, invest … and as you’re doing it, teach them to do it.

    Second best advice: let them learn by doing … gradually let them do the things you do with your money: earn money, save for things, pay bills, invest, and be frugal.

    Keep up the great work!

  3. 03 Dec 08 8:23 pm

    Giving chilldren money in the form of coin is fun for them because they get more pieces. It halso elps them see how much things cost because they have to give up more things.

  4. banji
    04 Dec 08 12:59 am

    Avani-Mehta – When the pocket money is fixed, we have to creatively think of ways to manage it. That is probably the basis of all financial management :) Thanks Avani for sharing

    Leo – Another great advice. Teach via example and let them learn the rope by doing it. Get your children involved in your financial management. Hey, it’s basically their money anyway right? :) Thanks Leo

    Susan – That is actually a new idea for me. I will personally put it in practice to my child. Thanks Susan.

  5. 17 Dec 08 5:44 am

    Here’s my tip: stop buying them things. Of course that might be a bit extreme but in all sincerity, make sure they never leave home without their wallets. Then when they want something the answer is I am not buying it for you but if you think you really need this it will come from your money. I can’t begin to tell you how much money I have saved already and the kids get a true lesson in wants and needs.

  6. 17 Dec 08 11:31 pm

    CreditMom – That’s is one of the most brilliant yet simple advice I heard :) Thanks. If we want to teach the children the value of money, we need to allow them to learn.

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