Teaching the Concept of Money to Your Kid

0 Comments 29 October 2011 / by

27th october was announced as national blogger day in indonesia. so while i was posting some tweets on how i started blogging and how it impacts my personal even my professional life, i was looking back on how i used to write.

blogging for me was always as a channel to pour my ideas, my observations and thoughts. by writing it, it also helps me to be more structured in my writings. there were times that due to blogging, i had a lot of help to write better. i love to write and i have tons of ideas i like to pour in my writing. i once made a goal to write a book and take off from work, but that never happened because the time i spared to write a book, i ended up using it to travel. and it was cut short because professional world had called me back.

the goal is still there, but whether it will happen or not, God knows. for now i just try to keep writing.

one of the things that i realized i was writing a lot since the beginning of blog was giving out tips and info about finance. maybe because this has a lot to do with my background. i always tried to give out easy tips, but the truth is, it’s so hard to give out financial tips that’s easy to understand. that’s why i give hats off to those who are able to explain finance in a simple term possible.

recently, i grow an interest about how to teach kids about finance. i know it’s a bit too early for my daughter since she’s only 3.5 years old, but i don’t think it’s too early to teach her about the concept of money and finance. a book by rosina simon, “raising a $smart kid”, is a really interesting book to learn about this. but of course, most of the tips apply to older kids.

so far, i teach naia about money through the concept of savings and also the concept of money through a simple role-playing. everyday, if she is a good girl where she behaves well, eat well, sleep well and follow instructions from her nanny, i will give her coins. at this point, it doesn’t matter if it’s a dollar coin or a ten-cent coin, all she cares is how many coins she gets, not how much. she then will drop the money into her piggy bank. i taught her that when the money is in, she cannot take it out. she can only take it out after it’s full or when it’s for emergency. then i have to explain to her what is emergency. it ranges from charity to gift. she can borrow the money and take it out, but she has to return the coins back.

no, it’s not easy to teach that to a 3.5 years old. she’d be like “huh?” then just brush off my explanation. but of course, i don’t back off. i keep at it because i know someday she will understand.

the concept of money through a simple role-playing of a seller and buyer is also a great activity. naia looves doing this. she’d placed all her toys and take turns pretending to be a buyer and a seller. sometimes, she’d use the coins in her piggy bank to play too.

i learn from my own experience where my parents really spent a great deal amount of time to make us understand about the concept of money, savings, budgeting and spending wisely. at some point, my brother and i would only know that if we get some money, we save. spending our money is out of the question 🙂 so what we did is we spend our parents’ money by asking them to buy things we want. ha! but at least, we make great amount of savings. over the years, as we grew older, we understand this better and we always have the habit to always “pay ourselves first” whenever we get some money. meaning, we always put aside some money in our savings first, before we spend anything. we grew to know that money does not come raining on us from the sky, so we had to prepare some for a rainy day. the fact that we used to live abroad and had to learn about this the hard way, we learned it early that we have to save if we need to survive.

on the same note, i want to teach that to my daughter. she needs to understand that. and it’d be ranging from questions like:

mama, why papa and you need to work?

because naia needs to go to school to be a smart girl. and i need to make money so i can pay the school, buy food, pay for naia’s bus fare, for naia’s clothes, shoes, and milk.

mama, then i don’t need to go school..

if you don’t go to school, you won’t get to be smart. then when you get bigger, you won’t be able to have a job and make money. if mama and papa no longer working, who would pay for the food?

then she’d be thinking herself, not too sure what to answer. i bet she’s confused, but that’s okay, she’ll learn to understand it soon.

or in another case, she would ask:

mama, why angela (her bestfriend at school) does not have a car?

because angela’s mommy and daddy cannot buy a car.


because a car is expensive. angela’s mommy and daddy would rather buy angela good clothes, food and school fee than buying a car. if they bought a car, they cannot buy food and pay school fee for angela.

*quiet, thinking*

that’s why, you cannot throw away food and take off from school or destroy your toys. because they are paid with money. you are lucky because mama and papa can buy them for you now because mama and papa have enough money to buy them. if you don’t eat your food, it’s being thrown away, while there are other kids who are hungry because their mama & papa don’t have enough money to buy it for them.

*goes back playing*

i know that when i explained it, it’s too complicated for naia to understand, but it’s not that she doesn’t get it. she would, just she needs to process it in her litte mind. but i feel that the younger she is to get exposed to it, the easier for her to understand as she grows older.

i know that every parent would buy everything for their child just to make them happy. it includes me too! i want to make her happy, so i buy things for her. but as parents, we need to also teach our kids the concept of savings and wise spending, putting boundaries of how much we can spoil them. therefore, i do things to ensure that my daughter does not feel like she can ask whatever she wants and she’d get it. so my tricks are usually goes this way:

1. i don’t buy things she asks right away
if i take her to a store and i found that she likes something that i know would make her happy, i don’t buy it right away. i’d ask her, why she wants it. does she really need it? then i tell her, that i’ll buy it if she’s being a good girl for x days. or after she had finished her meal, or something like that. then, if i think the item is worth to buy, i’d go buy it without her knowing it. i’d give it to her later as a reward if she had indeed does something as she said she would. that way she doesn’t always get what she wants when she wants it. she needs to earn it.

2. i tell her that i don’t have any money
if she wants something very expensive, i tell her that i don’t have enough money to buy it. it’s too expensive. as she grows older, she’s grown to understand it. so i’d just tell her that i’ll give her 10 minutes to play with it, then we leave. if she wants to play with it again, we’ll come back next week. but i cannot buy it for her as it’s too expensive.

then, of course, i would never buy it! usually this happens when the items had no value for her. or she has something similar to the item. or it’s too big to fit in our apartment.

3. the art of bidding
do this with your child constantly. for example, naia wants to buy a candy at the store. as usual, she would pick at least 3-4 candies. because i don’t allow her to eat candy too much, i bid her to buy something else. like a fruit or biscuit. if that doesn’t help, i told her that i’ll buy only one. she then has to choose which one and i told her because my money can only buy 1 candy, not 4.

this will also help her to decide. in the long run, it’ll help her to know how to decide for herself. i always ask her to choose things, from what she wants to eat for lunch, what dress she wants to wear, etc. and the consequence is, she has to stick on what she has chosen. finish the meal she has chosen, etc.

4. apply rewards concept
i use this constantly too. she would be rewarded if she’s doing something nice. the reward of course does not have to be big. sometimes it’s just as small as a pack of biscuit, or a cupcake. sometimes even a kiss 🙂 but that would build her confidence that she can do something and it was good that she’s being rewarded for it. sometimes it’s not just about money, but her behaviour overall. of course, later it will be applied as she grows older that when she’s doing a chore, she will then be rewarded with something. but this is quite tricky. you don’t want your kid to grow up only thinking that she needs to be rewarded for doing something good. so you must explain it carefully.

5. concept of charity
for now, it’s a simple as set aside her unused toys and give to the needy. another small thing is to drop coins to the charity box. right now, naia doesn’t know that the box is for charity, but she’d loove to drop coins in them. she’d ask some to us everytime she sees one. it’s a bit complicated concept to teach her now, but eventually i will explain it better as she grows older. the concept of charity is important to teach so that they can evaluate their rewards not just in terms of doing something good, but also in terms of sharing to others.

the point is, kids mimic what their parents do. so, before you start trying to teach your kids about the habit of savings and spending wisely (want vs. necessity), you may want to take a closer look at your own habit. have you set a good example yet?

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a worker by choice, a mother and a wife by nature / owner of slesta.com / co-founder of the urban mama / the urban muslimah | email: slesta[at]slesta[dot]com

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