Kids Money Lessons
It is never too early to begin teaching money lessons for kids,
especially when prices keep rising but consumers receive less for
what they buy. Teaching children to spend money responsibly as soon
as they understand how you can walk out of a department store with a
nifty toy tucked under your arm, will make them realize that nothing
is for free and that cash is earned, rather than just given.
Some children will display more conservative financial behavior than
others. For example, you may give two different children one dollar
to spend, and one will put it in a piggy bank while the other will
immediately use it to buy candy, toys or whatever happens to be
available to them at the moment.
5 Money Lessons you should teach your kids
1. Money Lessons-Dollars and
Cents have Value
Kids need to be taught what money is and where it comes from. From a
child's perspective, money is paper or metal discs that come from
mom's purse or dad's wallet. Beyond that they may know very little.
They need to learn that cash has value and must be earned, and the
best way for them to learn is through experience. One way to teach
this is to hide play money around the house. Try to make the hiding
places neither too easy nor too difficult.
Set up a small store with things they can purchase for various
amounts. Price the things you know they will want most at a price
high enough that they will have to scour the entire house to find
enough cash to buy it. As they search for enough cash they may get
frustrated but don't provide any hints, just allow them to find it
on their own. When they finally find enough to make the purchase
they will have a good understanding of the amount of work they had
to do in order to get the item. Some kids might purchase a lower
priced item so they have something and then find their isn't enough
hidden money to get the most desired item. This will reinforce the
need to make wise decisions.
2. Money Lessons - You get what you pay for
Once kids learn that cash has value, they need to be taught to find
the best value for their money when they make purchases. A phrase
that is commonly used today is "getting the best bang for the buck".
It isn't always wise to buy the cheapest item, especially if an item
is of such poor quality that it won't last or perform as expected.
On the other hand it isn't always wise to buy the most expensive
item if there is an item of equal quality that is less expensive.
Today they have the advantage of being able to read customer reviews
about a particular item before they buy it. Parents can help their
kids learn the skill of determining the best quality for the price
by including them as you research a possible purchase. Ask them
which item they think would be the better one to buy and why, and
then show them why they might not have made the best choice. After a
few times they will learn how to find value themselves.
3. Money Lessons- Hard work pays off
The next thing that kids need to learn is that they are not the only
ones trying to find the best value in the products they buy. They
themselves become the product to a future employer, and they need to
offer more value than the next person or they might not get the job.
If they do get the job they can't expect to get raises in salary if
they don't provide good value for what their employer is paying
them. They need to learn to have a good work ethic and do their best
in any task that is given to them. If the quality of their work is
poor, their boss can find someone who is willing to do a better job.
If the quality of their work is outstanding, their boss will reward
them with more finances and responsibility. A good way to teach this
concept is by making their allowance dependent on the quality of
work they do in their chores. When they ask, "why did I get more
cash than last week?" you can tell them it's because you mowed the
lawn without being asked or did a much better job doing the dishes.
See details on our Teaching
Kids about Money Ebook
for more lessons on banking, checking
accounts and credit cards as well as more money
designed to teach kids basic concepts and using cash
in everyday life.
4. Money Lessons- Taking a risk can lead to receiving a
This is an excellent concept for older kids but also one that is
more difficult to teach. A good example of this concept comes from
my experience as a boy scout trying to earn money for scout camp. It
was determined that the way the troop would earn money would be by
selling pens with a clock in them, of which each scout got a
A friend of mine and I, not wanting to compete with the other scouts
for the same customers, decided to rent a power rake and offer a
lawn de-thatching service instead. In less than two weeks we were
the only scouts to have earned enough cash for camp and much more.
The risk we took was the money to rent the power rake and gasoline
to haul the thatch to the dump. The risk lead to the reward of
greater earning potential than those selling pens.
5. Money Lessons- Decisions have consequences
While this is last in the list it is by no means of any less
importance. In fact, it may well be the most important because it
applies to all areas of life, not just cash. Very little in life is
free which means there are tradeoffs that have to be made. Studying
hard in school comes at the expense of spending time with friends.
Working hard for that next promotion comes at the expense of
personal time or taking time off work for vacation.
Accepting a promotion might mean you no longer get to do a job you
enjoy or have less time to spend with family. We need enough
finances to make sure our basic needs are met, but how much beyond
that is a decision we all have to make. These decisions reflect a
person's goals and priorities.
Dollars won't solve all a person's problems, but pursuing it at the
expense of other important areas of life has its own consequences.
On the other hand, struggling to meet our basic needs is also not
desirable. Kids need to know the importance of getting a good
education and developing skills that will give them the earning
potential to achieve their life goals. The decision of whether to do
that or not is theirs.
Money lessons for kids don’t need to be a "black and white" kind of
instruction. Rather, offer advice to kids then let them make
decisions which show them that there should be a balance between
saving and spending. Once they have saved enough to purchase
something they really want, it will instill in them a sense of
accomplishment; a memory that will hopefully inspire them later in
life when saving means the difference between financial security and