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How To Teach About Money To Kids?

Discussion in 'Toddlers' started by Benadryl, Sep 30, 2020.

  1. Benadryl

    Benadryl Bronze IL'ite

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    My 5 year old is getting to a stage where I think he needs to start learning about money.
    How it is earned, how much we can spend (budgeting) and what can be saved. I think he has a fair idea that mum and dad work to earn money. But he keeps losing his toys at school without any sense of financial loss, despite repeatedly explaining to him that his head mum and dad have worked hard to buy toys. I don't know if I am being difficult in expecting him to keep track of his toys while at school. He has some developmental issues (mainly speech and sensory processing) - but I think keeping track of toys is something that is not very challenging. We keep teaching him about buying groceries on sale and how paying less for more means more money in your pocket. However, I think I want to come up with a better framework over all as the 3 year old daughter will also soon need to be taught.

    I am fundamentally against the idea of giving money as allowances or payments for daily chores.
    Chores have to be done. End of story. Giving a hand in throwing trash, doing dishes etc is a part of their routine. I make sure its every alternate day now. It will soon be daily. I don't want to start the habit of pocket money as neither me nor my partner have ever gotten pocket money and are not equipped to monitor or teach about pocket money. Anyway, I am looking for robust overarching ideas regarding money. One of them that I am thinking is, that we buy back containers from our kids - little plastic probiotic bottles, milk cans, etc and give them a dollar each for them. Put the money in visible jars and make them take the jars to the shops when they want to buy a toy and help them make the transaction. I can't think of anything bad (wrong habits) that will happen due to this - other than they wanting to purchase more probiotic bottles. I don't know yet how the milk cans selling will happen - there's only ever one milk can going to the bin every 2/3 days.

    I'd be grateful for some ideas please. They can be what you did with your kids - or what you now think should have been done. Or even any techniques that you've simply come across, which have impressed you. Since I have almost never had a healthy relationship with money I want to make sure my kids dont pick it up from me.
     
    Last edited: Sep 30, 2020
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  2. Caughtinbetween

    Caughtinbetween Gold IL'ite

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    looking forward to some helpful replies and conversations in this space . i am no where near being a role model in terms of money management when my baby's turn to learn comes soon.
     
  3. blindpup10

    blindpup10 Finest Post Winner

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    My 2 cents-
    My kid is 5 as well. I believe that it is a bit too early to bring money.
    Just from my childhood and the parenting style, I was raised. I think money is a bigger concept that can be introduced a bit differently rather than just transactional and saving value to it.

    My kid doesn't keep his toys in its place and thinks I can afford toys for his cousins, best friend. ( I can for their bday and Christmas) but the way my kid talks to us to get his BFF's the things he has is a little bit too much. My kid is also very open in asking for toys from my family and his friends too.

    The other day he asked my BFF to "if she can afford the toys" Adults burst laughing. We later told him not to talk about money if it is not with daddy and mommy.
    As most of the play dates are virtual- we have witnessed him asking his friend to buy the toy for him and his BFF has also asked our kid to buy toys. (adults don't pay too much attention)

    We are slowly starting to teach him about the value of the toys and how he needs to put them in the right place and take care of them instead of destroying them.
    The rule in our house is to keep the play area, room clean ( free of toys). He gets points/ stickers and doesn't actually get money.
    Kids are overjoyed with stickers at this age.

    We are also trying to teach him to be happy with what he has. Now, with online shopping, I give him the choice to buy his clothes and let him choose little things like a toothbrush, PJs, and water bottle .... this gives them the freedom to express and fulfilling their needs. I decide the budget- my kid can choose things what is shown to him.

    Instead of buying back the junk- I would suggest having him do chores around the house consistently.

    Simple ones- like clean the table after he eats, help feed the pet, open the doors when the pets have to use the bathroom, sort his laundry, helping hand in drying dishes, work in the garden. These are little responsibility and problem-solving should be introduced.
    (I read your view after I posted- but don't you think they will actually start to think that junk has value and what if they become a hoarder?)


    We started doing the above from the time he is 4. Now we don't actually pay him... :facepalm: The intention started off as to pay him. But then, when he is enjoying doing the chores and money doesn't come into the picture.

    We also started giving him incentives work if he is able to practice his alphabet, numbers, or practices addition or draws. He would get money. Again- we realized the cons of it- he can do the activity with half heart and not enjoy or get involved in it.

    So we shifted our goal

    Our goal is to have our kids focused and practice things daily.
    Coz I strongly believe if we inculcate these practices where they do it coz they enjoy it, then when around 8 we will start to create a monetary rewards system... which is realistic and achievable for them.
    We should prepare them for success rather than leave them to figure out the path of success.

    I grew up without pocket money as well- But my cousins and other friends had pocket money. I feel it is good to give them pocket money and they will make mistakes within a matter of $ or $$ at the most rather than gain the money control when they are older and blow up in $$$.

    Maybe we can hear from others who have older kids.
     
    Last edited: Oct 1, 2020
  4. nuss

    nuss Finest Post Winner

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    I agree with @blindpup10, five is probably too young to understand money concepts but I guess it is never too early to introduce the kids to money management.

    My kids are 5 and 7. My 5-year-old doesn't understand the concept very well yet. She can count, add, and subtract but the whole money management thing is still a lot for her to figure out.

    A few things that we do with the kids:

    They both know that we are saving money for their college and know exactly how much. My parents always talked about our financial situation with us and I am thankful for that. My husband's parents never did and he has no clue how well his parents are doing financially (He knows they are doing well but money is a taboo topic in their household). I do not believe in allowances for chores either. I feel as a family we all do our work and kids are no exception. However, I do believe in pocket money because I grew up with pocket money and learned to save it for future use. We haven't started pocket money yet because they are too little to "need" anything outside what we buy.

    We don't buy random toys all the time. They pick out toys for their birthday and Christmas presents and we buy what we think is age-appropriate on Christmas from "Santa" in addition to what they know they will get. Grandparents, uncles/aunts send them presents for birthday and Christmas as well. I also buy a special gift on Diwali, something that they have been wanting to get for a while (we are an interracial family and celebrate both festivals). Whenever we get catalogs, they circle things they would like and make a list with a clear understanding that not everything on their list will show up.

    I have started taking them to Once Upon a Child to sell their gently used clothes/shoes and toys. they get to keep the money. They also have to donate toys to make room for new toys on their birthday. My 5 yo has taken this with great enthusiasm. She routinely puts away toys she doesn't play with anymore for donation/ sell. She bought a new doll with money she earned from selling her old stuff and that helped her think about how money works.

    My 7 yo is learning about interest rate/compound interest and I hope he will understand how saving for a long time earns interest. He is very good with delayed gratification (more so than I am).

    We did buy a lot of board games/ classic games and a playhouse this year due to stay at home but most of these will be good for several years.
     
    Last edited: Oct 1, 2020
  5. Rihana

    Rihana IL Hall of Fame

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    Keep it casual for some more years. After sanitizing and putting away all the grocery, if either parent has energy left : ) can go over the grocery receipt with the child. Point out what was on "sale", which are must have's, nice to have's, sales tax if applicable. Amazon's Prime day is coming up.. : )

    If giving an allowance, pocket money etc is not preferred, the child can still "save" money for something he wants to buy. Like, my kid briefly sacrificed McDonald's Happy Meals and we used to count that as money he has saved to buy I-don't-remember-what.

    The concept that possessions cost money and one should take better care of them -- we have discovered that they will learn this only after they start earning money themselves. Or, possibly when they themselves have to put in the effort to research, buy, "return", and experience "darn .. bought it for too much."

    As they grow older they can be allowed to look at the credit card statements. One such pie chart where Citicard kindly displayed how much we spent on to-go or eating out was an unforgettable event in the household. : )
     
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  6. hermitcrab

    hermitcrab Platinum IL'ite

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    Never too early to introduce money and manners! Not sure where you are located but few things that can be done easily in US and can also be done in India (I did it when little):
    Take them to bank.
    Fill put withdrawl slip, deposit slip in front of them.
    Have them in car for drive through banking.
    Take them to atm.
    Buy them several piggie bank- one actual piggie looking and other with number locks. Let them save some money in this- money becomes tangible.
    Take them for food shopping- always talk about 'money of things'. What you must be thinking in that trip- tell them about it.
    Open bank accounts (if okay with you) and ask well wishers to give money instead of toys etc- it can be 5, 10 what ever. Talk with kid about it and count it several times and take them with you to bank to deposit.
    Your aim should be raiser 'savers' I feel life is much happier that way.
    Turn requests for toys/stuff/eating out often- quoting money.
    Tell money is better spent on experiences- that too with limits! Have this kind of tag lines and quote them often- your child will learn them.
    Don't be ashamed if child talks about money with anyone.
    Talk to them mortgage and specific investment in simple terms- build on it this talk progressively as they get older, introducing more complex vocabulary and items.
    Let them play with same toys. Buy toy used and sell toys too. Buy used books.
    Always them to be careful with their money, save money and use it wisely.
    Your kid is listening now, they won't when they are teenagers.

    PS: Tracking toys at school will be very hard for any kid and must be difficult for yours given the challenges. If possible, do not send toys. Do you have to?
    One of our stuffed toys was kept at daycare- I think, because it looked like it could be having spy cam. Another very emotional toy was taken at day care- by the care giver- it was almost an antic of a toy- that's why.
    After that day care- the toys were never allowed, and I do not send
     
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  7. Viswamitra

    Viswamitra IL Hall of Fame

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    @Benadryl,

    Thank you for starting a thread on discussing money with the children. I still remember when I was talking to my wife about what we can afford and what we can't when my son who was 7 years old present in the car replied, "Dad, why worry about money, let us go to the ATM and draw more money when we need it". He genuinely thought those who need money can go to the ATM and draw money and he didn't understand the concept that one needs to have a balance in their bank account to draw money. That is when I decided to teach him about financial management than teaching him about the money.

    I found a two-day children's program to teach financial management simply teaching income, expenditure, receipts, payments, budget, banking, etc. I have written about it earlier. He didn't grasp all of it but asked me a lot of questions about balancing the budget a lot. This program brought awareness to him about how important it is to look at the price and buy things instead of buying whatever he needs. When he went to Middle School, he asked whether he can participate in a student exchange program to go to Tokyo, Nagano, etc. which we readily agreed. His teachers who accompanies 4 girls and 3 boys selected (He was in the 7th grade at that time) told them that they could ask the parents to buy tickets but all expenses in Japan should be earned by them. He was the only child with Indian passport and a green card at that time so I applied for a Japanese Visa and explained to him why he needs Visa to travel when others didn't need it.

    All of the students were asked to be a Caddy in a Bridge tournament that happened over 3 days and he promptly delivered all cash earned and requested me to keep it safely in the bank. When the time came, the teachers asked the kids to convert them into traveler's checks and carry them in their bags. Periodically, they were taken to bank to convert their traveler's checks into Japenese Yen. My son was joking that one sheet of Travelers check gave him a boatload of Yen as he was struggling to understand the exchange rate of various currencies. Eventually, he used his own funds for his expenses in Japan and brought some nice gifts for the parents and grandparents. He bought only a Sword for himself which was permitted to be brought in the plane as it was pre 9/11 period. The students stayed with Japanese families and hence their new Japanese friends' parents took care of boarding and lodging except in Tokyo. He was impressed with the culture in Japan.
     
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