Interesting Ideas for Teaching Kids About Money

Jonathan Clements has some unusual and interesting ideas for teaching kids about money including the following:

• Let's say you give your kids $5 a week in pocket money. When it's next time to fork over their allowance, offer them a choice: They can have the usual $5 right away -- or they can have $7, equal to a whopping 40% more, if they're willing to wait a week.

• Try varying the form of their pocket money. One week, give them five singles. The next week, give them a $5 bill. You will likely find your children are slower to spend the $5 bill.

• When her two kids mention things they want, Ms. Becker adds the items to each child's wish list. A few days or weeks later, she goes over the lists with her kids -- and sees which items they still want to buy with their own money or receive as birthday or holiday gifts. "When they were little, it surprised me that, by Friday, they sometimes couldn't remember a specific toy they so desperately wanted on Tuesday," Ms. Becker says.

• When Hannah went on her first school field trip, I gave her $5 and told her I wanted the change. She returned with a bag of trinkets and a few pennies. On the next trip, I gave her $5 again. But this time, I told her she could keep any money that was left over. She came back with $5.

All of these were new to me and each of them sparked some potential I'd like to explore with our kids. In particular, I like the first and third ideas. I plan to discuss them with my wife and try them out on a couple of unsuspecting children. ;-)

BTW, Jonathan Clements is the same guy who suggested asking kids whether they'd like a soda when eating out or if they'd prefer to have the $1 it would cost instead. His kids went from soda fiends to dollar junkies and lovers of water. ;-)

How about you? Do you have any interesting tips for teaching kids about money?

Comments

[Colonel Cash]

In this day and age, teaching kids about money is one of the best things that we as parents could ever do for them. Thanks for the post!

[Hank Osborne]

Teaching kids to use their hard earned money responsibly is very important, but they first need to earn it. I would love to see some creative ways to teach kids the value of a dollar in terms of earning not spending. Giving allowances teaches kids the basic principles of a welfare system and breads a sense of entitlement.

[Dedicated]

Wow I love the tracking of "wants" in a notebook. I think this is something that the kids would carry with them for the rest of their lives.

I wish I had known it back when.

[moneyandpf]

Pretty good article and I'll never complain when someone is trying to help kids understand how to handle money.

On the first one though if you were a kid would you really pass up $5 to get $7 a week later. I know for sure at a young age I just wanted to buy something and it didn't matter if I got $2 the next week because that would mean I did not get to buy anything that weekend. Of course now I'm wiser but still I would be surprised to see this work very well.

[Jennifer/GA]

I don't have children, but I am very close to an aunt who has 3. My aunt is the kind of person that if she wants something she just gets it and then figures out how to pay for it later. I think she comes by it honestly as my grandmother is the same. She has 3 children. The oldest is 19 and money burns a hole in her pocket. Or it did until she got her first job a few months ago. Now she is out of high school and has to pay rent to live with her mother. Her younger brothers are different. The oldest boy will save his money for weeks or months until he finds something he really wants to spend it on. For his birthday a couple of years ago, he wanted the Nintendo DS hand held game player. His mother told him she couldn't afford it, but he came back with what if I pay for half? Needless to say, he got the DS player. What a negotiator! The youngest boy is a little of both. Sometimes he blows it as soon as he gets it and other times he saves like his older brother. It's amazing how 3 children raised by the same person can be so different when it comes to money.

[Kevin]

My parents used #3 with us all the time. If we saw a toy that we "had to have", they would tell us to put it on our birthday, Christmas, Easter, etc. list. Half the time I'm sure we forgot about it by then. I plan on doing it with my kids as well.

[Richard]

I say give them an allowance of $500 bucks a month. At the end of the month give them an itemized statement (like a paycheck) deducting $480 for boarding, food and clothes and let spend the 20 as they like. That should get them in the real world mindset

[Cori]

Hubby and I read this great book about this very topic when our now-5-year-old was about 3 called FIRST NATIONAL BANK OF DAD by David Owen. Hubby came from a very frugal, but affluent upbringing and I came from the complete opposite. I wanted to have a plan in place for how we were going to educate our children about finances. Highly recommend this read! (And of course, we recommend you try to borrow a copy from your local library to be frugal!)

Love your blog!

[Jim]

I don't have kids yet. However, when grocery shpopping, what if you give your kids the money you save on any USEFUL coupons they find in the paper for items you actually use/need? It'll likely get them scouring the Sunday paper and helping you do something you probably already do. They don't get money for coupons for stuff you don't need obviously, only the useful ones. I'd be happy to give my kid $5 if he/she found a few coupons for me. I would imagine it would be a great habit to start.

[Cheap Like Me]

No way I'm trying #1 - my child would wait for the $7 and push for $9 the next week! :) I love the soda idea. Most places soda doesn't even cost $1, closer to $1.75.

We give my daughter $4 a week right now (she is turning 7). She can have $2 to spend, puts $1 in a longterm savings envelope (which she urged me to transfer to a savings account once I explained about compound interest), and she puts $1 in her "caring can," a special can she decorated. She's saving the longterm money for if & when she can ever buy a horse. She has given her caring can money to Trick-or-Treat for UNICEF, to buy gifts for a child in a family we sponsored at Christmas, and will give more for her orangutan conservation fundraising birthday party.

The hardest for us is to let her blow her spending money. She has saved up to $75 or so and then fritters it away .... I guess that's what it's for, but the child already has dozens of toy horses. We really don't buy toys for her except at birthday and Christmas -- she has to buy them herself (or twist Grandma's arm).

It is exciting and motivating to see how she gets into saving.

[Jackie Star]

Stumbled upon this very interesting, I don't have kids yet, my mother never gave us pocket money as money was tight, but taught us all out to pay bills on time, budget and save and I thank her for that, or I would be in a mountain of debt.

[Finance Girl]

That's definitely true about the field trips! I think as my stepson gets older, we will start including other expenses in his allowance, like money for clothing and lunches, and let him keep what's left. I also like to set limits for the amount I will spend on something (like, I'll buy you a pair of $20 shoes - if you want the Sketchers that light up, you have to pay the difference).

[Melinda]

"I say give them an allowance of $500 bucks a month. At the end of the month give them an itemized statement (like a paycheck) deducting $480 for boarding, food and clothes and let spend the 20 as they like. That should get them in the real world mindset"

Posted by: Richard | March 12, 2008 at 09:43 AM

I stumbled onto this page as well but the above comment by Richard had me laughing! It's funny but I think he's really onto something there. Also, I think kids in this country are in desperate need of education about credit cards, APR's, overdraft fees, etc. Actually I think that financial classes should be required in all schools just like history and math. Considering we're such a money driven society it amazes me that they're not.