Teaching children the value of money in a digital age

“Mom, can I have a new video game? Can I have a new jacket? Can I have an iPad?” The list of “can I’s” go on forever. Parents wonder if their kids have any idea about the value of money. Guess what? They don’t.

In the day of dollar bills and coins, at least children could watch parents count out bills. As their young children developed the concept of numbers, they could see that money could be counted, like cookies in a cookie jar. But today, most transactions are made with credit cards or electronically. Online purchases show up on the front steps in boxes. Mom and dad don’t write out checks anymore — they push a button and their bills are paid. This new technology makes it even more difficult for children to understand money.

I remember when I was a 10-year-old. I had a paper route and after I made my collection at the end of the week, I would sit on the floor of my room, counting pennies and nickels. I felt like a millionaire as I planned out what sweet treats I would buy with 20 shiny pennies.

That experience helped me connect work, wages and expenditures. It was an invaluable lesson in this complex relationship that continues through our adult life. My parents always expected that my brothers and I would work in high school during summers and that some of that money would be set aside for paying living expenses at college.

I had the same expectation of my daughters but encountered some resistance from my wife, whose family had not expected her to work. But I persisted, and I helped them obtain jobs at our local coffee shop. They both worked as baristas in high school. When they come home on college vacations, they always worked as many hours as they could at the coffee shop. They liked having their own money, and they learned as much from their work experience as they did from their schooling — maybe more.

When you begin to think how money permeates almost all aspects of family life, from weekly supermarket shopping, buying clothes, shoes, recreational activities, electronics, cell phones and paying for vacations, it is easy to see how difficult it is for children to understand the value of money.

Here are some practical suggestions. Remember, all lessons must be age- and stage- appropriate:

Allowance is helpful. Allowance is a wonderful device to help children understand that money is finite. Keep it age appropriate and make it clear what the money is for and what it isn’t for. Be consistent and predictable (remember that important concept?). I’m not a big believer in connecting allowance to chores or grades. Children should have household responsibilities because that’s part of family life. When we live together, we all have obligations that we have to live up to. Grades are a system of motivating children to work hard and to measure their performance, not a way to make extra money.

Establish a budget for various expenses. As my daughters grew, we established a budget for back-to-school shopping. And as we went shopping, we helped the girls see how much money we spent on the items they wanted and how much was left over. This can be applied to other areas as well (activities, sports, hobbies, etc.).

Discuss family finances with children. Again, consider their age and stage and their ability to keep family information private. The more children understand family financial matters, the more they will understand how you make decisions. This can become a model for their decision-making processes when they become adults.

Paul Schoenfeld is a clinical psychologist at The Everett Clinic. His Family Talk blog can be found at www. everettclinic.com/ healthwellness-library.html.