Teaching Children the Value of Money

Children are able to discern from a very young age that things they like come with a price tag. That new pair of shoes or the jeans they see their friends wearing does not come free. "Daddy can I have that too?" More often than not, parents will make sure that they buy their children the necessary items they need. But they will stop short of giving their children everything they ask for. Is this wrong? What would you do?

I had a mixture of friends as a child who came from vastly different backgrounds. Some grew up in huge three storey homes and went abroad each year to far flung destinations, while others lived in government aided rental properties and had hardly even stepped out of their own county, let alone country. I did not like my richer friends more than the poorer ones. I just seemed to be able to do more with them and visit nicer places with them. I was able to keep up with them because my parents were also fairly well off. My poorer friends and I had to be more imaginative in our play and spend time entertaining ourselves for free. A visit to a park or to the river helped to pass the time. We did not often shop for new clothes together because their parents could not afford such luxuries. They lived on second hand clothes, which I did not mind at all. I did not look down on them because of their situation in life.

One thing that each set of friends had was a different view of the value of money. The richer friends did not worry about where their next meal would come from and they took their expensive clothes and luxurious surroundings for granted. They could afford what they wanted and did not have any anxiety about whether or not their parents could send them on the next school trip. Their pockets were full and they were happy and content with this arrangement. But my poorer friends thought more about money and dreamed of what they could do with it. Many simply wanted to escape their life of poverty and live a life of ease and comfort. They hated having to stand out as different at school and sending back consent forms for school trips without parental approval and a signature. I know this was hard on them and they resented their family for not having more money, even though it was not their fault.

Rather than add to a child's obsession with money and possessions, it is best for parents to try and teach their children the true value of money from an early age, whether the family is well off or not. This does not mean telling them in minute detail how much the water and phone bills cost and how much they spent this week on food. My parents taught me in a more subtle way. They gave me a weekly allowance and out of that money I was expected to buy what I wanted and to also put some aside to deposit in the bank for when I was older. At the age of 12 I had saved the equivalent of $400. Dad took me into town and I deposited the money into a savings account. I was so proud of myself for saving the money and for not spending it all on things that I did not really need. My parents did something else that I am still thankful for. They did not give me everything I asked for. They had never said "no" to a school trip and I was allowed to take part in extra curricular activities that sometimes came with a small fee. But they knew where to draw the line.

I went to my parents one day and told them that my bedroom furniture needed to be replaced with more modern furniture. I knew what I wanted and where I would buy it from: a new chest of drawers, dressing table with mirror and a bedside cabinet, all in matching pine. I was surprised when my parents said that they would not be paying for any of these items. Instead, they told me that if I really wanted to buy these things that I should save my pocket money and perhaps even take on a part-time job. So that is exactly what I did. I was not even a teenager when I started saving hard for these purchases. I become really frugal and penny pinched as much as I could. I got a part- time job after school too and slowly my money started to build up. I wanted to make sure that the furniture I wanted was not sold to someone else and I wanted the price to stay the same, so I would regularly visit the shop and put money down on it. Layaway suited me well. I felt like a proper little businesswoman. As soon as each item was fully paid for I would arrange for the delivery and my parents would help me arrange the furniture in my bedroom. I had finally paid for everything I had originally asked my parents for! It gave me a good sense of achievement. To begin with, I had secretly felt a bit resentful at my parents for telling me I should pay for all the furniture myself because I knew they could afford it. But it opened my eyes to the value of money and made me see beyond the price tag. I saw the hard work behind it because I had gone through it myself. Now that I look back, I am thankful to my parents for making me buy the furniture myself.

If parents are mindful of the need to instill proper lessons on money into their child from a young age they can help to create a more well balanced and mature child later on. Spoiled children are not a pleasant sight. "I want! I want!" You often see them in shops and they never seem to stop wanting until their parents give in and spend far more money than they had intended to, just to keep the peace and avoid a further scene. But this does not teach children that sometimes being denied a toy or game is not a bad thing. It sends out the wrong message to children and they quickly come to realize that if they ask enough times or scream they will get what they want. Rather than a point blank "no" try to explain to the child why you are refusing their request. Perhaps you could ask them which they would prefer on this trip out, an ice cream or a toy? Then explain to them that they cannot have both because there is not enough money to buy both.

As an adult, I have carried on this view of money. Rather than be consumed with materialistic purchases I try to simplify my life and just buy what I need rather than what I think I need. I have taught my husband the same principle. Before we met, he was not a good saver and he was more impulsive in making a purchase. But I have helped him see whether he really needs the latest gadget. How will the item impact his life for the better? How will he get by if he does not buy it? Now we have a comfortable lifestyle without the worry over money. It is important to survive, but it is not an all consuming pursuit. What about my childhood friends? The more wealthy friends still have comfortable lifestyles and do not worry about money. I do not know what values they are now teaching their children, but they are maintaining the lifestyles they enjoyed as children. My less well off friends have become very knowledgeable and balanced when it comes to money. One has started her own child minding business and is financially stable, able to provide for her family. You've heard it all before, but it is not mere coincidence that money is really immaterial when it comes to the pursuit of true happiness. It pays the bills, fills the cupboards, and makes the world go round, but it does not guarantee a successful and rewarding life. That is the one of the most valuable lessons you can teach your child.