5 Ways to Teach the Value of a Dollar To Your Kids
If you’ve ever searched content like “how to help my kids be financially literate” or “how to help my kids not be spoiled,” you most certainly have run into the advice that you should “teach your kids the value of a dollar”. While many people give this advice, figuring out HOW to do that, is much more complicated. Theoretically, you can know that teaching your kids the value of a dollar is important, but when it comes to implementation?… it can feel downright overwhelming. Let me share 5 tips to help “dial the whelm down” and actually teach your kids the value of a dollar.
How to Teach Your Kids the Value of a Dollar
1) Help Kids Learn By Earning the Dollar
The quickest way for a kid to not understand the value of a dollar is for them to be given all their money without putting in work. When a child puts in the work to earn money, they are less likely to spend it on frivolous things. They’ll know how hard they worked to earn that money and as a result will spend it less quickly than if they had just been given a hand-out. By earning the dollars they receive, kids feel a real sense of ownership over their money and thus act more responsibly with it.
2) Don't Teach the Value of a Dollar, Help Kids Experience It
A study conducted at Brigham Young University found that the best way to teach kids how to be financially responsible is actually not by teaching at all! Rather, it is by providing hands-on experience. For example, if you try and sit down with your kids to teach them the value of a dollar through a PowerPoint presentation, the content will likely go in one ear and out the other. On the other hand, as kids are put into situations where they need to be stewards of their own money and have the freedom to make their own financial choices, they’ll actually learn and internalize these principles as they could not do otherwise.
3) Help your Kids Establish Their Own Perspectives About Money
Like it or not, you have beliefs about money one way or another. You may feel incredibly stressed by money, perhaps with a firm belief that money is super hard to come by, or you may feel quite confident in your money know-how, and even believe that it can come easily. Indeed there are many possible ways in which one may consider money. Regardless of how you think about it, your own perspectives on money WILL come to the table as you teach your kids about it. Whatever your perspective on the dollar, you built that perspective over time based on your own experiences. Whether thoughts about money tend to be full of stress, or confidence, or whether you lack clarity in how to think about it, your perspective will vicariously pass on in varying ways to your kids as they observe how you handle different situations. Providing your kids with opportunities where they can have positive experiences with money and establish confidence in managing it in their young years, can set them up to be financially successful in life.
4) Strategize on How to Spend Money
When I was in high school, I loved McChickens from Mcdonalds. Like, a lot. They were delicious and better yet, they were only a dollar. Since I loved them so much, I began to mentally convert all my paychecks into McChickens in my mind. If I were getting paid $100, I would immediately think about the 100 McChickens I could purchase with it! Admittedly, I didn’t actually buy 100 McChickens when the paychecks came in, but it helped me realize the economic principle of utility. The idea of “utility” in the economic sense, is that each dollar you spend can give you a measure of joy. If you figure out what gives you the most joy, and you optimize spending your dollars in that direction, you’ll find far greater satisfaction in your life! As you work with your kids, help them figure out what things bring them the most joy, and help them to save up for those things or experiences.
5) Analyze Past Spending With Your Kids
As your kids make purchases, hopefully strategic ones that bring them high amounts of joy, it is a great idea to help them analyze past purchases. As they think back to the things they purchased this year, or as you think back over the things you’ve purchased, what things are they/you super grateful you bought? What things gave you buyer’s remorse? As you analyze your spending, you’ll find areas where you are winning with your money and areas where you could improve. Spending money on foolish things is not the main problem. Instead, not learning when we do this is the bigger issue. As you teach your kids how to analyze money spending in this way, you are teaching them invaluable skills that they’ll be able to use for the rest of their lives.
Tools to Help Teach Your Kids the Value of a Dollar
Looking at what you can do to teach your kids the value of a dollar, you may have found a common thread. To be most successful, kids need to be put into situations where they are in control of their finances and they have the power to make purchases and mistakes. They need a financial playground to learn and grow in, and ideally, one that isn’t too expensive for you as a parent! I wanted this for my kids, so I created Kudosy! Kudosy is a free financial playground app where kids can learn how to manage money effectively, through experience. With Kudosy, parents create and manage a family economy. They can award kudos for jobs well done, and kids in turn learn to manage their kudos effectively. We’ve curated an awesome list of fun toys and experiences that you can have your kids redeem their kudos for, or you can even create your own. It is the perfect playground for your kids to learn the value of a dollar. You can join our Kudosy public beta now, or sign up for our newsletter at kudosy.com. This will notify you about updates and tell you when the Kudosy app will officially go live!
You're Invited to Experience Kudosy!
To access the Kudosy beta you must have an iPhone device.