When it comes to teaching your kids the value of money, unfortunately a theoretical approach can only get you so far. If the practical experience they have with money begins and ends with the allowance they punctually receive then they won’t learn to value money all that much. This is further compounded by them receiving anything and everything they want from you, whenever they want it, because after all, the parents will pay, won’t they?
A more practical approach to teaching them about the value of money has to be implemented and fortunately it’s not that hard at all. All you have to do really is involve them in as many of the money decisions as possible, which would naturally mean that they’ll get a window into the manner in which you handle your finances.
I know that most parents, particularly the traditional father figure who is the provider, don’t really want to let everybody else in on the manner in which they handle their finances. This is the old fashioned way of approaching things. Times have changed and so should your approach to handling the family finances and imparting the all important lesson of teaching the kids the true value of money.
Break it down to hourly earnings
Yes, when they become more conscious about the world they live in, their surroundings and their reality, children will gravitate towards the justified belief that it is your duty as the parent to provide for them financially and otherwise, but you’re not raising monsters and so they’ll understand when you make them aware of just how hard you have to work to make sure they’re okay. Break it down into hours.
When you hand over their allowance for example, they must be able to equate that with the number of hours you spent working for that money. That will set them into a state of awareness which will at least make them think about how they spend their money. They’ll be more likely to make wiser spending decisions.
Share your income versus expenses records
For some reason which is beyond logic, your kids will eventually find a way to find out how much you earn. It’s just one of those things…
Consequently, in order to avoid a scenario in which they believe that you make bucket loads of money and could afford to spend a whole lot more than you let on, let them in on your expenses as well, including the expenses which are directly related to them.
Involve them in financial planning decisions a little more as well and they’ll be well on their way to understanding the true value of money.
However, if you are going through a bit of a financial crisis or are unable to manage everyday expenses along with your debts, this might not be knowledge that your children need to know. These scenarios may call for legal action and the services of a bankruptcy lawyer to help you resolve the issues. Be assured that you can get through it, and do not let the worry pass on to the kids. While you could tell them that you are facing some trouble, there is no need to make them privy to the whole picture.
Financial management exercises
Finally, if you really want to implement a practical exercise in financial management that will instantly have them understand the value of money, commoditise aspects of daily life such as those chores which fall outside of the regular domestic scope, perhaps offering financial rewards as well such as some prize money for performing exceptionally well at school. You could get your child to write out invoice prices, teaching them some further real-world skills that they may need later in life!