The Value Of Money: Raising Money-Smart Kids

A lot of people say that money is the source of evil and if you are one of these people, I’d say you are a hypocrite. Though the power of money has put a lot of nations into ruins, using its power responsibly can create a harmonious society. For this reason, it is important to teach children the value of money so that they can put their money into good use.

Our mother taught us how to save money  since we were children. In fact, every year, she would get a  bamboo pole with three hollow internodes which we use as our alternative piggy bank. We would then fill the insides of the bamboo with coins and paper bills so that, by the end of the year, we can use the money to buy Christmas presents or save them to be used for enrollment next year. Yes, I was able to go to school all the way to college because of my bamboo piggy bank. And since being thrifty has been a part of my life, I also want  my daughter to instill this value.

However, my daughter is just like any other children. As soon as she gets money from her titas and ninangs,  she’d like to spend them on sweets. I’m afraid her spending habits will become worse should she grows up. For now, her world is limited to what our nearby sari-saristore can offer but what about when she grows up? She may end up becoming a shopaholic in the future. I am not jumping into conclusions  and the future is still too far to fear whether my daughter’s spending habits will get worse.

Just recently, I was talking to my cousin and she complained that her 11-year old daughter demanded her a touch-screen mobile phone. During my time, I could not even demand my mother for Tamagochi. The thing is that with the high consumerism today, kids will easily be swayed to spend their money. Thus said, how do you teach modern day kids to save? Here are some practical tips to encourage children to save money.

(1) Get them a piggy bank. You can buy a plethora of piggy banks today that will inspire them to save money or you can make them one using canisters. I made a reusable piggy bank using an ordinary Lay’s potato chips canister and just punched holes on the lid where the coins and folded paper bills can easily fit through. I am happy to say that my daughter’s spending habits changed because of her piggy bank. Piggy bank now, stocks and mutual funds later.

(2) Develop a  habit in your kids. You need to develop a habit among your kids to save everyday. In my case, I encourage my daughter to collect loose coins at home and save them in her makeshift piggy bank. If ever she gets money from her aunts and godparents, I hold on to the money for safekeeping. Parents, take note that you don’t have any right to spend your child’s money even if they are given as gifts provided that you ask permission from them first.

(3) Teach them that every centavo counts.There are some people who do not value the lowly 5 centavos but mind you, your 1 peso coin will not be  complete without it. And so,  teach your child to respect the lowly bronze-colored denominations.

(4) Start an allowance. Some parents think that giving children lunch money will encourage children to  spend more. Thus, the trick here is to explain to your kids that the money will be enough for the rest of the week and they will not be able to get more until the next week. This will make your children spend their money intelligently.

(5) When shopping, explain to them the cost of the things that they want to buy. Before, grocery shopping with my daughter can be unbearable because there are times when she throws tantrums whenever she wants something that I don’t buy. If you have kids like that, explain to them properly why you couldn’t give in to their demands. In my case, I use bargaining and tell her that we can buy what she wants but do not have enough money for the fare to go back home. Although this is an outright fib, it teaches kids to prioritize their expenses.

(6) Set an example. A lot of parents are guilty of not setting a good example to their children. While they teach children to save money, they always buy the latest gadgets and designer clothes every month. As parents, we are our children’s first teachers and if children see us complaining about exorbitant debts and careless money-spending habits, then that is what they will perceive as normal.

(7)  Learning is a non-stop process. As my daughter is still very young to understand everything, I am excited to see her grow up so that I can re-teach her more about the value of money.  Learning, after all, is a non-stop process.

There are still loads of things that you can teach to your kids. Teaching kids to learn how to handle money does not start at school. It is true that there are lots of schools that teach students about the fundamentals of finances but most people do not  have the right attitude towards money. Thus, financial education should start early on at home. 

Update (October 26, 2012)

My daughter's piggy bank became full last week and we were able to save 2,900 worth of  coins and bills total. I placed it in time deposit with an annual interest rate of 3.5%. I got her a new piggy bank again and now we are saving once more.