Recently, my son E was asking me to buy something for him. I told him it was too expensive. He kept pressing me about it and I told him I didn’t have enough cash with me. Then he said “That’s okay. Just use your credit card!” I had to explain to him that we have to pay back whatever we purchase with our credit card. He is under the concept that this is magic money that comes from nowhere.
For his birthday, E had received a gift card for a toy store. We finally put it to use. I explained to him how much money was on it and how much he would have left to spend, based on what he chose to buy. When we were done paying, he asked why we couldn’t use the gift card again. He didn’t understand that it was a one-time thing if we used up the value of the card! He thought it worked like a credit card. Another time, my parents sent him a two dollar bill. We told him it was two dollars, but he kept looking around for the other dollar, thinking it was only one dollar since all the value was in one bill.
Now that E is 6 years old, I feel it’s a good time to teach him about the value of money. He’s learning math in Kindergarten and understands addition and subtraction, if nothing else. I’ve mentioned in past blog posts that we use pretend money for allowance and the value of each “dollar” is 25 cents. When we go to the store and he asks if he can get something, we tell him how many of the pretend “dollars” it would cost.
Teaching kids about money is definitely a challenge, as they don’t have a concept of where it comes from (definitely NOT trees) or how to use it. To E, a one dollar bill and a five dollar bill have the same value since they’re only one piece of paper. I'm sure that the sizes of coins will confuse him too, as a nickel is much bigger than a dime, even though it has less of a financial value.
I’d love any pointers on how you taught your kids about money.