I strongly believe that children should be taught the value of money starting from a young age. Too many times parents simply give their kids money to go to the mall or to the movies without the child understanding that the money had to be earned in some way. This makes the kids less appreciative of the value of money. You don’t want them to grow up and be financially irresponsible.

(image credit: qwurky via Flickr)

Even in schools and colleges, financial literacy is not a subject that is widely taught. Therefore we are seeing many kids graduate from college and starting out with a whole lot of debt - both student loans and credit card debt. They are digging themselves into a deep hole!

Everyone knows that the things that you buy for yourself are those items that you will take good care of. Spending your own money that you have saved, then buying that treasured item, makes it that much more important to you. You know that you wanted that item and you will take care of it.

It should be no different for your children. When your kids start demanding to have things, use that opportunity to make them work and earn it. You will find out very quickly just how badly they wanted that item in the first place if they have to earn it.

Around the house, there are many chores that your children can help out with. If you have older kids, have them rake the leaves or mow the lawn. Younger kids can straighten up the magazines or run out and get the paper in the driveway every day. Once the chores are done, you can reward them with some spending money. Explain to them that they can (and should) save a portion of the money as well. The point is they should earn the right to purchase the item they covet so badly.

Kids should tell their parents that they are working towards buying something. Parents can then set monetary values on the different chores the child will do. If the child wants to buy a $50 video game, it does no one any good if they were to pay them $50 simply to sweep out the garage. The child should be made to work and save.

Ideally for older children it would be great if they were to find extra work to perform at a neighbor’s house. You will find that when kids really want something they will be constantly asking if there is anything they can do to make some money. Parents should view this as both a way to instill some financial values in their children as well as making the child a functioning member of the family.

Another thing you can do is to buy them a share of a stock in a company that they can identify with. Do this as a birthday or Christmas present. For example, younger kids may like to own stock in Hasbro or Mattel. Older kids may identify better with Apple or Intel. This will also be an opportunity to teach them about how the stock market and investing works.

Helping children become more financially literate will help them on later in life. They will understand the value of money and learn how to set and accomplish their goals.

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