How to Teach Kids the Value of a Dollar

By Natalie Maughan

How many parents struggle with the incessant question of, “Can I get that?” or “Well, everyone else in my class has their own tablet.” The comments seem to come, informing parents that somehow, out of everything we’ve done for our children, we’ve fallen short by not showering them with every possible want they desire. How do we find a happy medium in which they can have certain privileges and enjoy certain luxuries while instilling a sense of work and value in those desired items? 

Here are some ideas you can use to help kids understand that everything comes with a price and it feels good to work for something.

(Understand that what works for one kid may not work for another kid. Or what works for one family won’t work for all families.)

Start an allowance.

One way to help kids understand the concept of money is to start an allowance. Whether you decide to associate chores with the allowance is up to each family.  Remember, it doesn’t have to be a lot of money; young children can get 50 cents or $1 a week for an allowance. It’s hard to comprehend a 20-dollar bill let alone count to 20 as a three or four-year-old.

Please don’t feel like you are cheating your child by only giving them $1 allowance.  In this respect, it will take some time to save money in order to purchase something they want. This helps to teach children to avoid impulse buying; they must wait and decide if it’s something they still really want before spending all their money to purchase it. 

Give them more time-consuming chores for money.

Sometimes kids have an item in mind that they really want but it’s not necessarily something they need and Christmas or their birthday is further away. It’s great when kids can earn money to buy something on their own. Try giving them some chores that are more time consuming and a bit harder than their weekly chores.

At our house, we needed a storage room cleaned out so one of our kids helped to clear the entire room out and reorganize it to earn a few extra dollars. I’ve also taught them how to do some of “mom’s” chores to earn extra money. They have learned how to sweep and mop the house or help with yardwork.  

Use real-life examples.

I believe that discussing money with kids is important. When you are grocery shopping with your kids, point out the differences between the name brand can of beans versus the generic brand. If something is on sale point out that, “This can is 20 cents less expensive than the other kind.” Explain that saving 20 cents per can adds up when you buy six cans. Over time, that can add up to be the same amount of money needed to buy a movie ticket, a new Hot Wheels toy or a Barbie. Or maybe you are saving money to go on a trip. 

This can be done with older children too. Perhaps discuss a clothing budget with your child. Take them to a few of their favorite stores and compare prices and then take them to a clothing resale shop. Help them to see that buying used can save a lot of money. If they still want that expensive sweatshirt, come up with a budget plan where each of you contribute towards the purchase: “I’ll pay $20 if you pay the rest,” or maybe, “I’ll give you the amount of money needed to buy the used sweatshirt and you can save the rest to purchase the name brand sweatshirt.”

Help kids earn money for items they want.

Kids can learn to save their pennies for something they really want. We have a daughter that really wanted a ukulele. She felt like it was something she needed right away and asked mom and dad to buy it. I’m sure every parent has been there, whether a ukulele or some other toy. My daughter already had a little less than half the money needed to buy one. We encouraged her to think of ways to earn the rest of the money needed as we didn’t see this as a need. 

It was summertime, so she decided to have a cupcake and lemonade stand. She made the cupcakes and lemonade, made signs and sat out front (with mom) for a couple hours until her goodies were all sold. She was almost there! After doing a few chores around the house she finally had enough. We went to Reiman Music with her wallet in hand and she bought the ukulele she’d had her eye on for a few months. The cashier smiled as my daughter dumped her wallet full of one-dollar bills and quarters on the counter and we all worked together to add them up to $50. 

Donate a part of their earnings. 

Lastly, we as parents can teach our kids to share monetarily through small donations to help others. Perhaps you can encourage your child to use some of their money to buy a few small toys for Blank Children’s Hospital or purchase food for the local food bank. I’ve seen kids set up Lemonade Stands in the summer with a sign that all proceeds go to the local hospital. What a great life lesson! When we help kids to see that money isn’t just for personal gain but can be used to help others, we are helping to shape them into more caring, selfless individuals. 

There are so many ways we can help kids to learn to save money and budget for things we want. We can help them to think of others through donations and service. What have you done with your kids that has worked well in your home? What struggles do you encounter? Leave a comment and let’s chat!