Dec 4 2008

Teaching Your Child about Money Matters

Posted by Shen-Li in 12-24 months, Education, Parenting
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One of the subjects that I’ve always felt important to teach my children is how to manage money – that is, how to spend wisely, how to invest it and how to save it for a rainy day. Now that I’m reading “Confessions of a Shopaholic” by Sophie Kinsella, I’m starting to think that it is even more important to teach Gavin about the value of money.

Honestly, I know that there is such a thing as lack of self-control when it comes to spending money. Heck! I can be pretty wreckless sometimes, but I’ve never ever allowed myself to come anywhere near the sort of financial situation Beck Bloomwood gets herself into in “Confessions of a Shopaholic”. Quite frankly, I thought people like that don’t really exist in real life until I remembered my mother telling me about a friend of hers. Her friend would buy so much stuff that her wardrobe would be filled with clothes that still have price tags on them!

When I was growing up, my mother was very strict with my brother and me when it came to spending money – even money that was given to us as presents. Although I feel my mother taught us well, I also felt she was a little too harsh. Everything that we wanted to buy had to be assessed on need. If it was purely a want, we could forget about it. If it was something we needed, we had to assess how important that need was and how urgently it needed to be filled. If it could wait, we would shop around until there was a sale or a cheaper version available.

My mother was about as thrifty as they come. She knew where all the best bargains were and she knew where every cent went. She was a walking catalogue of sales and bargains.

As good as she is at handling money, I also feel my mother is a little too extreme. Even though we weren’t poor by any means, I often felt deprived as a child. So much so that once I started earning my own money, I had a tendency to walk into a shop and pay the listed price for an item I wanted just because I wanted it (as long as I could afford it, that is).

What I want is to teach Gavin to be financially smart without depriving him completely.

Although he’s barely two years old, we have started inculcating the concept of money and needed to pay for things quite early. There are other benefits from teaching a young toddler about money other just the importance of saving. For instance, it helps prevent him:

shop-lifting unintentionally – I had Gavin running out of shops with products in his hand a few times. Now he knows that we have to go to the cashier and “buy” it first.
treating the shop like a friend’s house – a few times Gavin brought boxes to me and asked me to “open” it for him. I had to explain that we can’t open things unless we pay for it first.
throwing and destroying his belongings because there is some value attached to it – okay so this one isn’t going that well, but at least he’s generally pretty good about not throwing his toys.

To start Gavin off on the right foot, we gave him a piggy bank with coins to put inside the piggy on a daily basis. Everyday, when my FIL returns from work, he’ll give Gavin some coins to put into his piggy. Initially, Gavin was excited by activity and would eagerly run to my FIL to get money for his pig. After a while, when the novelty of inserting coins wore out, he no longer wanted to have anything to do with the pig.

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Even though he hasn’t fully understood why he needs money, I’m sure this is one of those lessons that children start to pick up subconsciously. One day, they’ll surprise you by practicing what you taught them. Encouraging Gavin to save money in a piggy bank is just the first step to learning how to manage money.

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