Teaching Kids the Value of Money

March 16, 2017 0 Comments

Teaching Kids the Value of Money

 Our Children are Not to Blame for Our Spending

We are the proud and adoring parents of twin mini hippos. - four years old now and growing fast.  We wonder every day where each minute has gone and how did we accumulate so many toys, clothes, tech gadgets and so on and so forth that we had never imagined could even be afforded let alone purchased. We have learned a few things and we ant to share them with you.  We wlao include a post from the Guardian Website about children and money.  We hope you get some value (excuse the pun) out of this.

First thing to mention is that for a couple of years from birth we brought toys to make ourselves happy, to see the smiling face of our boys as they played and they didn't really ask too much but we would spend and spend, buying new toys regularly like it was nothing.  Blame Amazon we thought - all these deals all the time and free delivery. We would even justify it by saying we can't miss this deal or we will feel bad if we see it for sale at a higher price and not afford it. Now we have got to the point where for some time the boys are expecting things if we go on Amazon or into a shop.  It is almost impossible to get through my local co-op supermarket with my eldest twin making a big fuss about kinder eggs.  It is my fault because for so long to keep the peace I have just said yes, OK, please don't make a scene and given in.  It has gotten to the point that I am making promises to my kids about toys that are becoming harder to keep.  I don't want to hurt their feelings but it is time to get control.  If I don't then the boys will not learn anything about money.  As a boy I learned nothing about money but it was the 80's and the world was poorer, kids wanted less.  I grew up not demanding, just desiring because I had learned that for kids where I was toys were at Christmas and Birthdays - if we were lucky.

Nowadays we avoid taking our four year olds to the supermarket, or looking on Amazon Toy stores.  This is sad because we love going out with them.  They are very sociable and loving and they make our world a better place by just being there. We want to take them with us and hope in time they learn, with our support how to behave and to understand the value of money.

How to get control of spending on the kids

Just say no - but explain why.  We know that in this process we will come up against the dreaded toddler tantrum and we will just have to be brave - it does not hurt them to hear no, but it does tug at the heart string when they get so upset.  This is because we let it go too far and have often given in to the tantrum due to fear of:

  • Tantrum noise the kids make in our flat - worry about neighbours being noise polluted 
  • Tantrums in the street - worrying about safety
  • Tantrums in the shop - worry about social norms being followed - ie controlling your kids

The first step has to be to be honest with the boys.  Mummy and daddy just can't buy the full set of Teen Titans figures, the Full set of PJ Masks and Mickey, Blaze and so on. We need to talk to them and say honestly we need to earn money to buy things and we don't earn money to just spend on toys.  Our money has to pay rent, bills, food, clothing. Fuel in the car.  

We need to explain to them that our money is like a pie.  The biggest piece of money pie goes on our rent. I am sure you get the point.  I like the pie analogy because I can do a big display for the boys and make it visual.  They respond really well to visual cues and I need them to understand that throwing temper tantrums will not change our minds because to be a good mummy and daddy we need to teach our kids right from wrong and to help them develop in to successful adults.  We have lots to teach our kids growing up and teaching understanding of the value of money and how things need to be earned is vital.

Directly Quoted From The Guardian Website

The parents of a child who has begged for the latest Lego spaceship, or merchandise from Disney’s Frozen film, probably won’t have uttered the words “delayed gratification” in their response. However, such terms could become a valuable tool in teaching children about money.

Most parents excel when it comes to teaching safety and good manners, but with money few know where to start. Money skills can be a blind spot because so many feel financially inept themselves. Yet research suggests parents’ behaviour is the biggest influence.

“As a society in Britain, we don’t talk about money – it’s a sort of massive taboo,” says clinical psychologist Dr Elizabeth Kilbey. “Unlike other parts of parenthood, there is no playground chatter about the topic and, as a result, parents revert to what they know – passing their habits down to children.”

So how do you teach your children to be financially astute and, eventually, independent?

Lesson 1 Start early

Teach them well – and early – says the government-backed Money Advice Service. Its research suggests that adult money habits are set by the age of seven. But financial lessons must be age appropriate to resonate, says Kilbey: “Young children are not miniature adults. Lessons should be tailored for their age, rather than just made simpler.”

Start as soon as they are able to count and make money the topic of regular family discussions. Time these around dates when they are due to receive a cash gift so that you can talk about saving versus spending.

Lesson 2 Want versus need

While your child will naturally ask for the latest games console, making them understand the difference between needs and wants will help them make sensible spending decisions from a very young age.

One way to do this is to put it into a context that your child can understand, says Kilbey. “If they want the latest Star Wars Lego set that costs nearly £300, explain how long it would take an adult to earn that amount of money.”

She suggests creating a specific example to put it into perspective. How many hours would a teacher, for instance, have to work to pay for that item? “This demonstrates delayed gratification which is an important part of learning about money.”

Parents should reinforce through words and actions that it’s important not to spend more money than you have. One good way is to keep the just-for-fun purchases in check by not giving in to every request.

“It is OK to say no,” says Kilbey. “As adults we are often told no, whether it is from employers or the bank, and children need to hear it.”

However, experts warn against saying you can’t afford it. It’s easy to use this default response when your child begs you for the latest toy. But doing so sends the message that you’re not in control of your money, which can be scary – and create future anxieties.

Kilbey suggest that a more appropriate way is to say: “We choose not to spend our money like that.”

Father, children and piggy bank
Separate money into different piles.

Know The Difference 

Providing pocket money in lower denominations makes it easier to allocate a proportion of income to different goals.

Labelled jars work to separate money – one for saving, one for spending, and one for donating. Any time they make money by doing chores or receiving birthday gifts, encourage your child to divide the cash equally among their jars. It’s not a huge act, but it does show that it’s OK to spend some, money, as long as you’re giving back to others and saving as well.

Once they’re older, their bank accounts can mirror the split.

Lesson 4 Learn from mistakes

When kids have their own money, it is essential that they make choices and deal with the consequences of their actions. By experiencing negative consequences first hand, they will learn to make smarter financial decisions.

“Let them take responsibility for small amounts,” says Kilbey. “Allow them to make mistakes. It really is the best way to learn.”

Lesson 5 Make it relevant

Enable children to experience using money on a practical level to experience the emotional highs and lows.

“First, they must save it, then spend it, then experience the euphoria that comes from buying the item they wanted, but also what it feels like to lose some money in the process. This will reinforce the idea that it must then be saved again.”

One way to teach children how to handle money is through routine tasks and household chores. Use the weekly food shop to talk about planning, saving and finding the best value. Let your children hold the list and tick off each item or, if they’re older, give them a few items from the list to find on their own at the best price.”

Using actual cash is important. “It’s only once they have grasped ‘real’ money can you move on to the more difficult concept of virtual or digital money,” Kilbey explains.

When your children are very young, work money concepts into their imaginary games, such as playing pretend store or restaurant. However, Kilbey suggests avoiding play money: “Parents should role play with real money and model the importance of giving it the care and attention it deserves.

“Store it properly at the end of the game, as it will show that it needs to be looked after.”

Lesson 6 Lead by example

What’s more, research suggests that a third of parents lie about money. Studies show this will only send the wrong message. They may learn that lying is a good way to cover up financial problems, or that lying about money is acceptable. If your child asks a financial question that you’re not comfortable answering, be honest and say you don’t want to talk about it.


If you are a parent who won’t hand over any cash until your offspring have earned it, you are in the majority.

Halifax research has found that around two thirds (65%) of children aged between eight and 15 are doing some form of household chores to earn their pocket money.

So when do you start paying? Dr Elizabeth Kilbey suggests a weekly amount during infant school then spaced out to fortnightly or monthly by the time they are finishing secondary school.

“There has to be some sense of the real world, and pocket money is a good way to do that as it teaches short- and long-term saving and good spending habits,” she says.

The average weekly amount given to children between the ages of eight and 15 is £6.35, according to Halifax.

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