Making Kids Money Masters
Money is called “a medium of exchange.” It’s used to pay for things. Money comes in all shapes and sizes. Paper bills are usually made from different types of linen. Coins are made from metal. Each bill or coin has a different value.
Many years ago, before there was money, people used to barter. Bartering, or trading, means that you give a person something that you own and, in exchange, they give you something that they own. For example, if you had a cow but you needed a wagon, you would try to find a person who had a wagon but needed a cow. You would give them your cow and they would give you their wagon and everyone would be happy. People still trade things but most transactions are done using money. These days there are many other ways to buy things. People use credit cards, debit cards, Venmo, PayPal, Zelle, checks, electronic transfers, etc. But it’s all still based on money!
Try to collect a quarter from each of the fifty states. Make sure you keep them in a safe place. You can buy a Fifty State quarter collection kit or make your own with the help of a family member.
Another fun activity to try is to take a bunch of different coins. Separate them into pennies, nickels, dimes, etc. Look at the dates on each of the coins. Can you find the oldest one? Can you find the newest one? Can you find one with the year you were born?
The first coins were made over 2,000 years ago.
The first paper money was made over 1,000 years ago.
Paper money isn’t really made from paper. It’s made from cotton and linen.
Shells, ivory, clay, live animals, salt and grain were all once used as money.
The world’s largest coin is almost 30 inches wide and is worth more than one million dollars.
Guitar-shaped and motorcycle-shaped coins were once issued in Somalia.
For KidsLet’s look at some different ways to get money.
A. Find it in unexpected places.
Sometimes you can be walking down the street, just minding your own business and there, lying on the ground right in front of you, is some money. Lucky you!
It’s a nice idea except that things are a little more complicated than they might seem. Sure, it’s good luck for you because you found the money. But what about the person who lost the money? Maybe they don’t feel so lucky. So, whenever you find something that someone else may have lost, a good thing to do is to first try to find out who lost it so that you can return it to them.
B. Get a gift of money from your family or friends.
One way to get money is when someone just gives it to you. Maybe it’s your birthday. Maybe it’s a holiday. Or maybe your grandma came to visit and she is so happy to see you that she just handed you some money. Getting a gift is very nice so always remember to say “Thank You!”
C. You can earn money by doing work or chores.
There are many jobs that need to be done around the house. These jobs are calledchores. There are also jobs that can be done outside the house. These jobs arecalled work. Everyone in the family should help out by doing chores. But ask yourparents if you can earn extra money by doing extra chores. You also can get moneyby doing work for other people, such as lawn care, pet-sitting, babysitting andshoveling snow.
D. You can get an allowance.
An allowance is money that you can receive from your family on a weekly basis. Maybe you get $1 per week. Maybe you get $5 per week. Maybe you don’t get any allowance. Maybe you get money whenever you ask for it. If you do get an allowance, keep track of how much you receive, how often you get it, and make sure you keep the money in a safe place.
E. You can sell something that you made or you can sell something that you no longer want or need.
Do you have games that you no longer play? You can sell them to one of your friends. Or maybe you can trade, or barter, a game you no longer want for a game that they have. You can earn money by selling something that you no longer want at a family garage sale. Are you good at arts and crafts? Maybe you can create beautiful paintings or picture frames to sell. Are you very good at using cell phones or computers? Maybe you can charge money to create your own apps or teach others how to use their own cell phones or computers.
Are there ways that I can make more money?
Can you help me set up a lemonade stand or other business?
Can I get an allowance?
Can I make extra money by doing extra chores around the house?
Can we have a family garage sale so that I can sell my old, unwanted stuff?
There are millions of things to buy: video games, movies, music, apps, dolls, toys, food, clothing, popcorn, candy, basketballs, hockey sticks, lipstick… The list is unlimited; however, your supply of money is limited. What is a youngster to do? The answer is that you must become a wise spender of money.
You can have almost anything you want. You just can’t have everything you want. It’s important to decide if the thing you are going to buy is something that you want or is it something that you need. A NEED is something like shelter, food, water and clothing. A WANT is something that you desire to have. For example, you NEED to wear clothes to school but you WANT the latest fashionable sneakers to wear to school. Most of the time, try to buy just the things you need.
Here’s how to make a monthly budget. You write down all the things that you think you will need money for this month, and a guess of how much each item costs. Let’s call this: “Total money going out.”
Then you write down how much money you think you will have coming in this month. Let’s call this: “Total money coming in.”
If you plan to have more money comes in than going out, that’s great! You will have extra money left over for extra savings. If more money is going out, you have to either get more money coming in or you have to have less money going out.
If you don’t have enough money, you have to either remove things from the list or figure out a way to earn more money. Don’t forget to leave money left over for savings.
As the month goes by, you keep track of the actual amount of money coming in and the actual money going out.
At the end of the month, you compare the actual amount of money coming in and the actual amount of money going out to the amount that you guessed at the beginning of the month.
If there are things on your budget that you want to buy but can’t afford right now, maybe you can find other ways to get them for a lower price. You can take out books and movies from the library for free. Just make sure you return them on time or you will have to pay a fine.
If there is a toy or game that you want but cannot afford to buy, maybe a friend of yours has the same game. Perhaps you can barter with them. You can offer them a game of yours for a game of theirs. This way, no one has to spend any money.
You can go to a neighborhood garage sale. Many items are on sale for very low prices.
Look online and in weekly newspapers for coupons that can help you purchase items for a lower price.
If you see a new item that you want, sometimes if you wait a while, the price goes down. Many times, new items are very expensive when they first come out. Also, if you wait, you will have extra time to think about whether you really need it.
This is similar to budgeting but a little different. Goal setting is usually for things that take a little longer to save up for. You write down all the things that you need and also, all the things you want in the future. You write down how much each item costs. Then you write down how much money you have.
You then try to figure out a way to earn enough money to buy the items on your list. It may take a long time to save up enough money to buy some of the items on your list but that’s okay. And, once again, don’t forget to leave money left over for savings.
You may find that you are spending a lot of money and you can’t figure out where it went. A good idea is to keep track every time you spend money. Write down what you bought, how much it cost, the date that you bought it and why you bought it. At the end of the week and month you can look back to see if you think you spent your money wisely.
Kids, ask your parents:
Can you help me make a budget?
What is goal setting and can you help me with it?
Where can I find coupons for the things I want?
Why can’t I have everything that I want?
With so many exciting things to buy, how can a youngster possibly save any money? Here are a few ways to become a wise saver of money:
A. Save your money!
The best way to save your money is to not spendit. That means not buying everything that you seein stores, on TV or online. It may be somethingthat you really want but, once you spend themoney in a store, that money isn’t yoursanymore. So, either don’t spend your money or, ifyou do spend it, spend only a little.
B. Keep your money in a safe place.
Once you have some money saved, make sure you keep it in a safe place. If youjust have a few dollars you can keep it in your house. Once you have saved morethan a few dollars, ask your parents to help you open up a savings account at alocal bank.
C. Divide your money into three categories.
Divide any money you receive into three categories: Money to save, money tospend and money to donate. Any time you receive money, make sure you put alittle bit into each of these categories.
D. Add to your savings on a regular basis.
Every time you get money, you should always put a portion of it into savings. Never spend it all. And make sure you put money into savings FIRST. Then you can decide what to do with the amount that’s left over
Here’s a simple chart to help you set a savings goal. You can save up for a new bike or new app or maybe you want to save money so that you will have more money in the bank. Fill in the answers to the first four questions. Then, as you get money, you keep track of it on this chart.
1. I’m saving up for?
2. The amount of money I want to save is?
3. The date that I will have the money is?
4.The way that I will get the money is?
Money that I saved (each time) – Total amount saved so far
It’s great having toys, games, money and savings. But not everyone is so fortunate. If we are able to, it’s important to help others. Here are a few ways that we can help others who are less fortunate than we are:
A. Give of your time.
You don’t have to give money to help someone else. You can donate your time.This is called volunteering. And you don’t have to wait until you have a certainamount of money. You can start today.
B. Give of your possessions.
Collect coats and give to a homeless shelter in winter. Sort through old toys that you don’t play with anymore and donate them to Goodwill or other local charity.
C. Give your money.
Hold a lemonade stand or bake sale and donate the profits to a local charity. Set aside a portion of your holiday gifts or allowance money and donate to a charity.
Learning to give to others transcends the financial aspect. It helps to reinforce to your child that they are part of a larger society that is bound together. Talk to your child about how it’s good to succeed as an individual but it’s also important to be connected to a larger community. They will discover the fulfilling aspect of volunteering.
Help your child pick charitable organizations of interest. With your child, do research to determine the beneficiaries of each charity. Donate as a family.
Volunteer as a family. Shop with your child to buy canned food and deliver it to the local shelter. Volunteer with your child at a local animal shelter.
Have your child set aside a portion of any money they get for their birthdays or allowances that will be donated.
Go with your child and visit a local nursing home in the neighborhood. The two of you can play games, read books and do crafts together with the residents.
Volunteer at a local food shelter to set tables, serve beverages and clean up.
Collect old clothing, blankets and toys and donate to the local homeless shelter.
Join a Walk to raise awareness and money to fight a disease.
Children need to learn how to handle money wisely. It is a life skill that will be useful to them both short-term and long-term.
As parents, we are quick to teach children to brush their teeth, say “please” and “thank you,” and look both ways before they cross the street. But, very often, they neglect one vital lesson – how to handle money wisely.
There are great temptations out in the world for children and adults alike. A few minutes spent on the Internet will present a child with endless temptation to buy toys, games, clothing, and much more. When kids are old enough to actually buy these items, online shopping makes it a little too easy. It’s more important than ever to teach children the proper balance between shopping, saving and giving.
And, while it’s not necessary to discuss your salary with your kids, you certainly can involve them in general financial discussions such as vacation planning, saving for college, major purchase decisions, etc. Engaging your kids in a conversation about money-related subjects will go a long way toward setting them on the right path to a healthy relationship with money.
In order for children to learn how to handle money wisely, they must acquire money. Learning how to acquire money is a vital first step towards financial independence.
Be sure to discuss the subject of honesty and integrity with your child when they find something that someone else lost. Explain to them why the right thing to do is return it, whenever possible.
After receiving gifts from others, be sure to teach your child to express genuine appreciation and gratitude. Help them write a “Thank You” note, when appropriate.
You can encourage your child to earn additional money by performing simple jobs in and out of the house. Discuss the many options to earn money that are available. Talk to your child to help them determine an appropriate price to charge for each job.
Regarding allowance, some people recommend giving your child a weekly allowance while others suggest that it’s better to not give a weekly allowance. Some say that children should get an allowance only for doing chores because it’s important to learn that you can’t get something for nothing. Others say that, when children get paid for chores, they don’t learn to be an integral part of the family. They say that the child learns to help only if they are being paid to help. If you do decide to pay your child for doing chores, agree with your child on a reasonable written list of chores with an associated payment for each chore performed.
Some recommend providing allowance without any strings attached. And others advocate a little of both. Our recommendation is to do your own research, talk to your child and try to find what works best for you and your family’s own individual circumstances.
Involve your child in having a garage sale. Gather unneeded items from your basement, attic and garage. Have your child suggest items that can be put up for sale. They can help create the advertising posters, help to set the selling price of each item, help with the inevitable negotiating with the customers, and help count the money at the end of the day.
It is important to have your child get in the habit of saving their money, not just spending it. A general rule of thumb for young kids is to save 50%, spend 40% and donate 10% of their money. As they get older, children may need to increase their savings rate to purchase a car or save for college tuition.
Goal setting is one of the most valuable lessons that a child can learn. Discuss long-term strategies with your child for accomplishing their money goals including eliminating items from their list, postponing purchases, increasing income, etc. Assist your child in creating a money goal chart. Discuss other areas in your child’s life where long-term goal setting would be useful.
Here’s a common dilemma that many parents have faced: You and your child are strolling down the aisle of the local store when your child sees the latest must-have toy that appeared in a recent online or TV ad.
Your child says, “Mom, I want that?”
You reply, “No, you can’t have it.”
Your child screams, “But I want it!”
You scream, “No, you can’t have it!”
Your child screams, “But I want it!”
You scream, “No, you can’t have it!”
… repeat ad infinitum…
Many parents have experienced this interaction. Here’s a suggestion to turn this into a teachable moment.
Your child says, “Mom, I want that?”
You reply, “Wow, that’s a cool toy!”
Your child replies, “It is. And I want it.”
You reply, “Is it something that you can afford?”
Your child replies, “I don’t know.”
You reply, “Let’s look at the budget we made.” (You take out the budget that the two of you prepared and review it with your child.)
Your child replies, “It’s not on the budget. I didn’t know about it when we made the budget. It’s a new toy that just came out.”
You reply, “No problem. Is it something that you really need or just something that you want?”
Your child replies, “I really need it.”
You reply, “Are you sure you need it? Maybe a friend of yours has one and can lend it to you?”
Your child replies, “No, I need my own new one.”
You reply, “Okay, do you want to take something off the budget and put this on instead or should we add it onto the budget?
Your child replies, “Let’s add it onto the budget.”
You reply, “No problem, now let’s figure out how you can afford it. We can’t buy it today but maybe, with hard work and good planning, we can figure out a way to buy it sometime in the future.”
When you return home, you can discuss with your child that the goal of advertising is to make you want to buy things that you may not actually need.
Discuss the concept of Opportunity Cost with your child. This is just another way of saying, “If you buy this, you won’t be able to buy that.”
Discuss with your child how turning off the lights when you leave a room is part of being a wise spender.
Discuss with your child that earning $10 and spending $9 is worse from a savings perspective than earning only $5 and spending $2.
Remember to set a good example by recycling and reusing items.
Help your child open up a savings account at a local bank. You can review the monthly statements with them, showing the increase in value. This can lead into a discussion of compound interest.
Encourage your child to develop a regular savings plan. Decide how much of each allowance or chore money will be set aside. Reinforce the concept of “paying yourself first” by setting aside money for savings first. Suggest a goal of setting aside 50% of any income towards savings.
Encourage your child to save as much as possible and set a savings goal. Set a target amount to save by a particular date. If your child meets that goal, you can add a certain amount such as, for every $100 they save, you will add $20.
You can make a savings goal chart. Once your child knows what they want to save for, the two of you can make a chart. Use stickers to indicate that the current amount was put aside.
Set a good example. Let your child see you save money. Be a good financial role model. Remember, your kids learn by watching you.
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