How to Teach Kids the Value of Money

As a parent, you hope that your child grows up to be fiscally responsible with a good job and a happy life. However, it doesn't just happen. It's up to you to teach your children the value of money, saving it and spending it. You need to teach your children the difference between wants and needs as well as how to save up for something special. Here are a few tips to help you teach your kids the value of money.

Teach Kids to Earn Money

A toddler can pitch in and help put away their toys. Older kids can pitch in around the house, taking out the trash, washing dishes and running errands if they're old enough to drive.

First, you need to decide if you want to give your kids a list of weekly chores and a flat rate for completing those chores or assign a pay rate to each chore and allow the child to earn as much as they can or want to earn.

With older kids, you might consider the second option while younger kids adhere to the first option. It might be difficult for a younger child to understand. The first option teaches your children that certain jobs pay more than others and helps them learn to make choices, both financially and based on time management.

Teach Kids to Save Money

It's not enough that your kids understand the value of money; they need to understand the importance of saving it too. Whether they want to save money to buy a new video game or an American Girl doll, you can teach them.

Younger kids need a piggy bank to save money, preferably a glass jar or bank so they can see their money growing. Older children benefit from opening a savings account. Work with your child to set a savings goal and as you pay them for chores each week, discuss how much to put in savings and how much longer they need to save to reach their goal.

Teach Kids the Value of Money

It isn't enough that you buy things for your kids and say this was purchased with your chore money. You need to hand them the money and allow them to hand it to the cashier. It makes a larger impact as they trade their money for the thing they want.

Also, you can teach your children about tipping service professionals. When you take your kids for a haircut, instead of just jotting down a tip on your credit card receipt, bring along some cash and ask your children to give the tip to the stylist and tell them thanks.

Eating out presents another opportunity to teach your kids about tipping. At the end of the meal, talk to your kids about the type of service they received and whether the server deserves an average tip, a large tip or below-average tip.

Spare change hides in the sofa and dirty clothes. Your first instinct might be to keep any loose change your child finds while working on their chores. However, you want your kids to understand that every penny counts so let them keep it.

Teach Older Kids to Make a Budget

From back-to-school shopping to holiday wish lists, teach your older children and teenagers to make a budget. You want to make sure that they have enough money for the essentials but will need to make decisions about things they want versus things they need. For example, they might need to choose between an expensive pair of the "must-have" athletic shoes and an extra shirt.

Once you start teaching your kids about earning money, the value of it and ways to save, your kids will become more fiscally aware. With your guidance, they learn to make smart choices and become hard workers.