How to Teach Kids About Spending Money – Metro US

How to Teach Kids About Spending Money

How to Teach Kids About Spending Money

This is the third part of our “How to teach kids about money” series.

One of my favorite childhood memories was looking through the toy store catalog and circling all the things I wanted for Christmas. Even with the excitement of unwrapping new toys, I was always bummed to find many of the toys I’d circled were missing from under the tree.

What I didn’t understand was the concept that those toys cost my parents, and Santa, a significant amount of money. 

Teaching kids that things cost money is the first step. Teaching them how to spend money will then allow them to understand your spending limits and lay the foundation for them to become good budgeters and thoughtful investors.

But when all they want to do is buy the latest toys and games it can be hard to know where to start in teaching them how to manage money. There are some simple things you can do with young kids to not only help them spend well but also behave better and learn the value of hard work.

Delay Gratification

One of the issues many adults have with spending is impulse buying. You see something you want and get it without much thought. This leads to overspending, debt and an unhealthy relationship with shopping. Help your child avoid this by teaching them to control their impulses.

You can do this with a token system for rewarding good behavior. Set clear guidelines for how your child can earn tokens and the rewards they can get for redeeming them. Make some small rewards for two to three tokens and some big rewards they’ll have to practice saving to redeem.

This system will hopefully motivate good behaviors but it’ll also teach them delayed gratification. After redeeming their tokens impulsively for a while they’ll get bored with smaller rewards and start to pursue big ones. It also teaches them to think ahead about their actions and their spending.

Give Kids a Way to Earn Money

Once kids understand the concept that money doesn’t appear out of thin air, you can start giving them ways to earn money. 

Instead of giving an allowance for their chores, assign them a task that doesn’t directly affect them like dusting or wiping floorboards. It should be a task that can be done easily and weekly but doesn’t need to be done perfectly. You can also offer the option of one-time jobs around the house or helping you complete a task. 

Paying kids for tasks like this will help them earn money while separating the concept of work from household chores. Offering extra work instills in them that you can choose to work more to have more spending money.

If your kids are older you can also explain to them how many hours of work it takes to buy something. If your child wants a $20 toy and gets paid $10 per hour, start a conversation about whether that toy is worth two extra hours of work.


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