Loving parents are ready and willing to lay down their lives for their children without a second thought. They provide food, clothing, shelter, love, support, toys, McDonalds, Disneyland and most anything else that will contribute to a happy childhood. Money is the one exception that should never be simply handed to a child if they are to learn its true value.
Like it or not, money runs the world and one day children are going to have to make their own way. Providing indications that money may fall into their lap is a recipe for future disaster. In many ways, parents can program their children to have excellent finance skills if they start young enough. It may sound unkind, but children should earn every penny they receive.
Even very young children take an interest in money because they see it used every day by parents who get what they want by possessing the shiny objects. It is endearing when a small child asks for the penny that are soon forgotten anyway. Instead of simply handing it over, parents can use the moment to create a learning opportunity. Have the child earn the penny by asking them what shape or color it is. Once the correct answer is given, he child has earned the penny. Slightly older children can earn pocket change by correctly identifying the coin, its worth or the sum of a handful of change. Children love games and end up working hard to earn the money while simultaneously learning the basics of coins.
Coins that the child has earned should be spent in any fashion they see fit. Typically, this will be on gum, candy or cheap toys that are broken within a day. That is how children learn about saving, and that you tend to get what you pay for. It will not take long for them to begin saving the coins they have earned without being nagged to do so.
The first trip to the bank to open a savings account is fraught with excitement and anxiety. Children are impatient to grow up but also concerned about handing over hard earned money to a stranger who promises to eventually give it back. These concerns can be easily overcome with preparation. Asking the bank employee to focus on the child before the event practically ensures that the child understands the importance of their actions. Receiving an account register and a special reward for each deposit motivates children to save though it will likely be years before they fully understand the process.
Teaching children the value of money requires some foresight into the type of child parents are hoping to raise. Delayed gratification, anticipation of needs and budgeting are adult financial lessons that can begin in childhood. Financially savvy, independent children learn the value of money early and the lessons remain with them for life.