"The easiest way to teach children the value of money is to borrow some from them." Anonymous.

Money matters

Without dollars we don’t get far. Our children are facing a future where their earning power will be high, and the variety of job opportunities almost unprecedented, but equally the cost of living will hit levels not witnessed by previous generations. As with most things in life, what we experience in childhood stays with us through adolescence into adult life. Pocket money is a great way to kick start positive savings patterns.

Pocket money educates.

There are many ‘firsts’ in a child’s life. Having money of their own is an important one. As adults who deal with dollars daily (usually searching for more) we take monetary matters for granted. Our children have little control over what we earn, some influence on what we spend, but until we give them their own dollars, no idea of the value of money. So when the time comes to give them their own financial freedom, it makes sense to invest a little time in explaining what pocket money is, what to do with it (save some, spend some) and the concept of earning money. As the role model, if you regard saving as important, so will they.

Starting Points

The piggy bank is a good starting place.

When children first ask about having a piggy bank, introduce the notion of saving money. Putting coins into the bank together on a regular basis or with grandparents (often generous with donations) and counting the savings at a later date, sets up the pattern of saving. Most children will welcome the idea of having their own personal ‘bank’ upon entering kindergarten where they will actually start to ‘play’ shop and recognise the purpose of money. Many schools provide school banking facilities and they become a formal extension of piggy bank practices.

Spending Sprees

Discussing the options for spending our savings is equally important to getting the dollars together. Saving dollars to take away on an upcoming holiday, or to buy the latest gizmo gives kids the notion of goal setting. Allowing kids to take part in the saving, decision making and purchasing, cements not only the process of saving, but instills the value of money. Kids can quickly get a handle on how much things cost and how long it takes to save for something. This is an invaluable lesson and can lessen endless requests for the next popular gadget. Subtle reminders of how much time it takes them to save for an item, puts purchasing power into perspective.

Valuing Money

Children build awareness that notes, coins and cards are exchanged for ‘things’ as they accompany you on your shopping trips. They also witness trips to the ATM where in their eyes a machine provides an almost endless supply of notes. Saying ‘yes’ to their constant requests for purchases and shelling out at the register without comment or explanation sends the message that unlimited money plus constant purchasing are a natural part of everyday life. Balancing their requests and actual purchases to a ratio that suits your family budget provides a realistic guide for them. As they get older, explain the process by which your family earns money and where it goes.

Children as a rule have no concept that water, electricity and energy are paid for unless we enlighten them. It is never too early to introduce the idea of ‘waste,’ especially considering the next generation will live with unprecedented water and energy restrictions in order to save the planet.

Pay Rises

As a general rule, the older they get the more money they earn. Equally the more they are expected to contribute to family chores and their own personal spending.

Some families opt for a birthday ‘raise.’ This stops sibling arguments about amounts earned and is generally accepted if introduced as a family tradition.

Earning Your Keep

Working for a living is a fact of life. The idea of all family members contributing to the household by helping out in some way is sound in itself. Add the enticer of dollars and you should get willing contributors. Give young children easy jobs that are related to their own environment and have some impact on them: picking up their toys, tidying their own room, unpacking their school bags and putting their school uniforms in the laundry basket. Try to balance the gender issue as they get older by avoiding ‘boy jobs’ and ‘girl jobs.’

When they ‘down tools.’

Don’t pay. Children can become masters of manipulation if they see a loop-hole. Early lessons in compliance are great springboards for developing a sense of responsibility. Human nature has a way of making us all look for the easy way out and kids are no exception. Pay them for minimal output and they’ll give you less and less as time progresses. The good news is you usually only need to delay the dollars once and productivity returns- pronto.

From piggy bank to mortgage belt, we all spend more hours, months and years toiling away for monetary rewards than we would like to count. So it makes sense that our children in their formative years learn sound principles of work, play and remuneration in a fun, balanced way.