While teaching Kindergarten for 12 years, the topic I dreaded teaching MOST was money. 

Here are three reasons why:

1) Money is an EXTREMELY abstract concept. 

Children don't realize that we have to make money in order to spend money; they think it grows on trees.

Once they DO understand the relationship between earning & spending, it's still an uphill battle because...

2) We live in a CASHLESS society.

Children rarely, IF EVER, see adults using cash to make purchases or pay their bills, so children have NO frame of reference for how much things cost OR how credit cards work

Even if they DID see us use cash more often, it really wouldn't matter too much because...

3) Our monetary system is CONFUSING!

Haven't you ever wondered why a nickel is BIGGER than a dime, but worth LESS?

Or, why a dime is smaller than a penny, but worth MORE? Well, so do children!

  

As difficult as it may be to teach children about money, this report from the Center for Economic Education proves the EARLIER a child learns financial literacy skills, the BETTER.

Here are some helpful tips on teaching children about money:

1) Use a traditional piggy bank for everyday deposits.

While many parents have a desire to replace the traditional piggy bank with three separate containers labeled "Save," "Spend," and "Give," this practice is extremely impractical as children typically receive money for birthdays or allowances in the form of $5, $10, or $20 bills (which can not be easily split between three separate jars).

Besides, there's just something magical about hearing that 'CHINK' when you feed the piggy!

 

2) Routinely empty out the piggy bank every month or so, trading coins for dollar bills. 

Start by separating coins from bills, and then sort the coins. Count the coins, putting them into stacks of 5 and 10, and then roll the coins.

This makes is MUCH easier to exchange large quantities of coins for dollar bills.

Not only is this a GREAT fine-motor activity, but it helps children practice sorting, counting pennies by 1's, skip counting nickels by 5's, skip counting dimes by 10's, and skip counting quarters by 25's.

Going through this process is also a great way to visually reinforce the fact that change really does add up! 

TIP: Coin counting machines found at most grocery stores charge a fee of 10% (or more) eliminating the opportunity for children to practice SO many important skills. Go through the process using coin rollers instead (which are FREE at most banks).

3) Split the dollar bills into three separate containers, labeled "Save," "Spend," and "Give." 

The most common percentage breakdown is:

50% Save

40% Spend

10% Give.

Young children will have a hard time calculating those percentages so teach them how to use a calculator (children LOVE using calculators!). 

Older children may still need help, but it's a great way to introduce "real-life" concepts as we deal with percentages every time we're dealing with discounts and/or sales.

TIP: Don't have Save, Spend, Give containers? Make some out of recycled cans, jars or bottles, and then decorate them accordingly. Want some stickers to help? Check these out (supplies are limited):

Teaching children how to split up their money into three separate containers is just the beginning though! They must also learn how to save for the future, spend responsibly, and give when able. Here are some additional tips, tricks, and tools that'll help reinforce these concepts:

1) Saving for the future:

Teaching children how to save their money is a difficult feat, especially considering how impulsive they are! Check out this cute video showing just how impulsive they can be:

Just like a big fat marshmallow, a piggy bank full of money can be extremely tempting!

Remove the temptation (and help your child develop healthy habits) by encouraging him/her to make occasional deposits at the bank.

TIP: Most banks don't offer interest bearing accounts for children so, in order to help them grasp the concept of earned interest, incentivize your child's deposits by adding 10% to the amount (s)he is able to Save.

A good amount to use (although MUCH higher than typical interest amounts!) is 10% because it's so easy to calculate; have $10.00 to DEPOSIT? Add $1 to it for a total of $11 saved!

 +   = YAY!

The point you're trying to emphasize here is that money saved really IS money earned. Understanding this concept will prepare your child to better understand the importance of long-term investments later on in life. 

Also, watching money grow over time is extremely motivating, so have your child use a ledger to track of all his/her deposits.

TIP: Ledgers are FREE at most banks.

Finally, talk to your children about why it's important to save (i.e. savings are used to buy big ticket NEEDS we'll have in the future, like a car, college tuition, the downpayment on a house, our retirement, etc.).

Things a child WANTS should be purchased using money from their Spend jar, which leads us to number 2...

2) Spending responsibly: 

We ALL have WANTS and, unfortunately, marketers know that, tempting us with schemes like "50%" or "BOGO" so it's important to help your child: 

    1. Learn patience, by keeping a running list of all your child's WANTS
    2. Research the best price by reviewing ads online or in the Sunday paper
    3. Use coupons from distributers like Coupon Sherpa, a FREE app that sorts discounts alphabetically by store name
    4. Ask for DISCOUNTS, like the ones available to teachers, military personnel, and students

When out and about shopping with your children, it can be extremely hard to say "NO" to impulse buys, however.  If you feel yourself starting to crack, set a limit, like $5, and insist that your child signs an IOU, settling up when you get home with funds from his/her Save fund.

If you decide not to cave in to an impulse buy, but your child sees something (s)he can't seem to live without, take a photo of the item and discuss it later.

The trickiest part of all of this is deciding how your children are going to make money in the first place!

There's a HUGE debate amongst parents these days, arguing whether or not children should be paid allowances for completing household chores. 

In our home, we've decided there are some tasks that everyone should complete because they benefit the whole family; we call these tasks "pro bono tasks" and they include chores such as replacing garbage bags or cleaning up the living room.

There are other tasks that we do pay our children for, however. These tasks are things we would typically complete on our own, but recognize the benefits of enlisting our children's help for two reasons: 1) it encourages their helpful tendencies, reminding them that they ARE capable and have something to offer  and 2) it provides us with an opportunity to put real-life money in their hands which is the ONLY way we'll ever be able to teach them how to save, spend, and give.

These paid tasks vary from child to child based on his/her age but, on days I actually take a shower and do my hair, my four-year-old son's job is to put my hot rollers back into the holder. When finished, I pay him $1. I also pay him to water my flowers or check the mail.

My six-year-old daughter has more time-consuming jobs as her attention span is longer; she clips my coupons each week and I pay her .10¢ for each one. She also makes me a cup of hot tea while I'm cooking dinner each night and organizes my jewelry on the weekends.

If interested in hearing more about age-appropriate "chores" and "pro bono" contributions to help increase your child's work ethic while developing financial literacy skills, I'm available to speak on the topic, as well as:

Raising Compassionate and Generous Children in a World of Excess and Entitlement

Rebuilding Relationships to Decrease Disruptions and Increase Compliance

Bedtime Routines to Strengthen Reading Skills AND Relationships

For a full list of topics I present on, please visit BethNowak.com, and to view my first public speaking appearance outside the classroom, check out my TEDx Talk "Helping Our Littlest Helpers"

 

Beth Nowak is a former Kindergarten teacher and mother of two who wanted to make memories with her children while making a difference in her community. Helping other parents do the same, she left the classroom to create Giving Families' Good Mail Challenges... fun and easy, family-friendly giveback activities that can be completed anytime, anywhere using materials readily available in most homes. To learn more and join the family, visit GivingFamilies.com.