Teaching Kids About the Value of Money

Teaching Kids About the Value of Money

 As summertime approaches, many teens and kids will be dog-sitting, running a lemonade stand, or working a part-time job. As your child starts making their own money, it is important to teach them the skills needed to make informed financial decisions. Viktoria Jurkovic of the Division of Financial Institutions at the Ohio Department of Commerce walks parents through the importance of financial literacy and how to educate your children on these important skills.

Children are constantly watching and listening and they can absorb so much from adults, so it is important to be open and honest in conversations about money.

“The more that you think out loud and the more that you have these conversations with your kids, the more appreciative they will be about it,” Jurkovic says. “One of the biggest things I hear adults say is ‘My parents never talked about money.’ Financial literacy is about understanding where money comes from, how much you have, and where you’re going to spend it efficiently. That’s really the big picture.”

“Financial literacy is an all-encompassing way of assuring that individuals are able to make good financial decisions that will benefit their financial health,” she adds. “It is a process of understanding the dynamics and the value of money, and then being able to make the best decisions based on their personal positioning.”

Start Early 

Kids should be taught financial literacy skills starting around age 3, about how to budget and how to plan for the future, but also about decision-making and being wiser with resources. 

“When we start to infiltrate the ways that we teach kids at a younger age, they start to appreciate and value money a little bit better,” Jurkovic says. “They also are at an age where they start to model the behavior that’s around them. So when you are playing store with your preschooler, and you explain you have to buy the vegetable, that is where the value of money is being displayed.”

Kids naturally will obtain financial literacy skills through modeled behavior. Children can learn some of these skills at school, but having these conversations at home is most valuable. 

For example, she says if you’re planning a birthday party for your kid, and you’re shopping around, talk about the process of what you’re thinking. Talk out loud so they can understand your decision-making process, and they can benefit from hearing the reasoning behind what you’re doing with your money, she says.

Teaching Teens to Save

For teens and kids who will be earning a paycheck, it is important to help them be responsible with their income and to be open and honest about financial decision-making skills.

“Maybe set up some type of a kid’s savings account,” Jurkovic says. “For teens who will be working a part-time job, explain to them that the check they will be taking home may be smaller than anticipated due to taxes.”

Jurkovic says it is important to be transparent and have open conversations. Start with a simple budget and save up for a goal — such as a vacation with friends or an expensive gaming system. Kids can then start to put away a little bit of what they earn for long-term savings, etc.

“Having this conversation with them is important, because we don’t want teens to get a job, make money, and then splurge it the minute they have it,” Jurkovic says.

Summer Lessons

While some kids may start earning an income this summer, Jurkovic says it is up to the family to decide if the child needs to start paying their phone bill, contribute to grocery bills, etc. Having your child pay a bill can help them become more financially responsible. 

“Maybe you can have your child pitch in $20 each check they receive, and then give it back to them down the road,” Jurkovic says. “At the same time, taking the $20 from them each paycheck still teaches them a lesson. Reassure them that they are contributing and helping.”

For younger kids who may want to hold a lemonade stand or bake sale or yard sale, help them devise a plan. Ask them: ‘If it’s a bake sale, what is the cost of your ingredients?’ ‘How are you going to get those ingredients?’ ‘What are you going to sell them for?’ ‘When you make profit from this, what are your plans with the money?’ ‘Why do you feel like you want more money right now?’

“If you are thinking about having a yard sale, maybe sell some items on eBay or another platform and have the child contribute,” Jurkovic says. “Have them take the pictures, have them write the descriptions, have them do the purchasing research, etc. It is a good way to have the child feel responsible for facilitating something

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