When we pay for things by tapping a plastic card, how do we teach kids the value of money?

In a world where we pay for things by tapping a plastic card (or even our phones), where apps help us manage everything from paying our bills to splitting dinner with our friends, and new currencies are popping up that don’t even have real notes or coins (hello bitcoin), how do we teach kids the value of money – when they can’t physically see it?

I’ve always been an advocate for open conversations about money in general, but now more than ever it’s essential that we start educating our kids when they’re young – where it comes from, how it works, what it does. So here are eight simple lessons to help you raise money-savvy kids:

Natasha Janssens runs Women With Cents which aims to empower women with great financial advice. Image: social.

1. It’s important to talk about money.

Recently another mum from my mothers’ group told me that her five-year-old son thought they got paid to shop (I wish)! She would often take cash out while making purchases, for example at Woolies or when buying a happy meal – so for her son, he saw that they would turn up to the store, collect their items and then get given cash. A reasonable assumption really! As parents, we know that kids interpret what they see (or don’t see) literally so openly talking about money can help to disperse those accidental misconceptions.


2. Money doesn’t grow on trees.

Instead of a regular allowance, reward your kids with money for doing chores or helping around the house. That all important lesson – that money is earned, not just given – will lay the foundations of their working lives. And if you can, at least to start with, pay them with physical cash. A jar or piggy bank (preferable a clear one!) is a great starting point.

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3. There’s a difference between a need and a want.

As soon as my son could talk, every conversation became a case of “Mummy, I need this”, “Mummy, I need that”, usually in reference to a particular toy or chocolate treat. To which I would typically reply “you don’t need it, you want it”. It is important to teach kids from a young age to learn to distinguish between a need (food, clothing, shelter) and a want (TV, sweets, toys), so that as adults they can find it easier to prioritise their spending.

4. You don’t need loads of 'stuff.'

As a parent, I often think about what my kids pick up inadvertently from my behaviour. And never was that more apparent than during a shopping trip with my three year old son. A moment’s pause in front of a pretty dress and he said to me, "No mum, you don't need it, you have one just like it at home." I was equal parts shocked and proud in that moment because he fed me a line that I used on him every time he asked me for another Matchbox car. And he was absolutely right. I didn't need it. And it was very similar to a dress I already had – so we kept on walking.


5. 'Stuff' costs.

My son’s matchbox car is only $2 and frankly if it means I don’t have to deal with a meltdown it’s worth it right? Or is it? At three years old he doesn’t grasp the difference between $2 and $200. So it’s not enough to say that something is expensive, or costs 'x' dollars. Grab some cash, take it to the store and hand it over to the cashier.

6. And “stuff” also doesn’t come easily.

Instant gratification has become the norm for us – everything is essentially a click away. But the reality is that when it comes to buying things we really want, often we have to save up for them. So what lessons am I teaching my son by handing over the matchbox car every time we get to the shopping centre? It won’t be easy, but try to resist the urge to buy things for them every time they ask so they learn the art of delayed gratification (and I’ll try to do the same).

7. If you buy this, you can’t buy that.

Opportunity cost is not just an economic term, it’s much more valuable (pun intended!) than that. When you teach kids that by purchasing this, they can no longer buy that, they learn to weigh up their decisions more carefully.

8. It’s good to give.

When your kids are earning a little money, you can start to teach them to be generous and help others. Allocate a small percentage of what they earn to giving, and they’ll soon see how giving doesn’t not only help others, but also helps them.

What are your tips for showing your kids the value of a dollar?

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