Finance: For Kids

Lately, my kid have been asking if they can go to Toys R Us and get some toys. I have no idea where they get this idea. They also ask for toys every time we go to the store. They also think we should go out for ice cream, or sno-cones, or Chik-fil-a or something, pretty much every day.

I told them you have to have money to do those things and they said we did have money and promptly pulled out my debit card from my wallet. Oh brother. I obviously needed to talk to my kids about money.

So, here's what I did:

First, I told them that the debit card only has so much money on it. It's finite, we can't just buy anything we want. I then decided to explain to them what money is and how we get it.

Lesson #1: What is money? I read a couple of books to them, my favorite was All About Money by Erin Roberson. I pulled out change and we went over how much a penny, nickel, dime, quarter and a dollar are worth. Samuel, who is especially fond of all things numbers and math really soaked up this part.

Lesson #2: Where does money come from? I explained that there are two main ways you can get money. A gift: like birthday money. Work: you have to earn it. When Daddy goes to work every day he is earning money so we can pay for all we have.

Lesson #3: What do we spend money on? I explained that we have to pay for certain items first before we can buy fun things like toys. We have to pay for our house, car, food and bills. I then did a little activity with them. I put together a bag that had different items in it, I put play food in it like bread and apples and also french fries and cake, phones, a picture of a house, a regular car, a fancy hot wheels race car, iPad, books, etc. I then wrote on two pieces of paper "Wants" and "Needs." The kids took turns pulling items from the bag and then putting them in the wants pile or the needs pile. We explained to them how healthy food like apples are a need but going out for french fries is a want. They really caught on with this activity.

Lesson #4: Where should their money go to? I explained how Mommy and Daddy take care of all their needs so when they earn and/or receive money we expect them to put it in their piggy banks for savings. If there is a special toy they really want they can save up their money for it, but they still need to put some of their money aside in savings. We also explained tithing at this point.

Lesson #5: How money works. For this concept I read books to show them how you earn and save money. My two favorite that really explained the concepts were: Making Cents by Elizabeth Keeler Robinson and Sluggers Car Wash by Stuart J. Murphy.

At this point we had gone to Toys R Us and I had taken pictures of some of the toys they wanted and the price tags. I also found this sweet Build-A-Brain kit at the library with play money in it.

Lesson #6: You can't have everything you want. I gave them the play money and then told them to choose one of the toys from the pictures. I explained how Lilly could get two toys because her toys were cheaper than Samuel's. I also told them they had to calculate sales tax into their total. They didn't really get the tax thing, but they did get the concept of money and would count out how much they needed.

I did all this over a period of a couple of weeks spending 5-10 minutes on each lesson. I also explain to them about how we spend our money. When we are grocery shopping and they ask for a toy instead of saying "no, we don't have the money" I say "we need to spend our money on groceries so we can eat." They really do understand it much better than I supposed.

I've also started to give them choices so they understand every time we spend our money on one thing it means we can't buy another. For example, I tell them they can pick out one treat from the store or they can buy a Lunchable, but we can't do both. When they ask to go out for ice cream I remind them that that costs money and instead we can make cookies with the items we have in the kitchen. I've realized that if I stop to explain my reasoning behind things they understand and go along with my decisions much better. (Let it be known though that I don't always do this and sometimes no is no, I don't have to explain myself because I am the mother).

We then implemented chores and an allowance system. They've always had chores but no allowance. We agreed on terms together and explained to them that there are certain things they have to do because they are part of a family and they don't get paid for those things. All in all it's proven to be a success.

One more book I liked: The Kids' Money Book by Jamie Kyle McGillian.