How to teach kids about money

I was in the car on the way to the store listening to my 7 year old and my 10 year old talking to their 8 year old cousin. They were talking about money, they were busy explaining to their cousin why he should not spend his money in the store, he should put it in the bank. "The bank will actually pay you money if you put your money in the bank but you can take your money out anytime you want." My 10 year old then said that "If I had a million dollars I would put it in the bank and they would pay me $.10 a minute to keep it there even when I am sleeping." I'm not sure here he got his information but, he was not too far off: a million dollars at 10% interest is closer to 9.5 cents a minute. That may not sound like a lot but, it adds up to about $49,800.00 a year. I'm not sure where my kids got their information from, I don't think they learned it in school! I they learned it from their financial genius father. He makes sure to explain the workings of money to the our older boys all the time. It has probably been overheard by their brothers.

It got me thinking about how we teach our kids about money. I can think of a couple of instances that have helped us to teach our boys.

I remember when I was about 16 or 17 when my dad out of the blue said to me "How would you like to have 15% to 20% more money without working any harder or doing anymore work?" of course I was interested, He went on to explain that if I wanted to buy something I should save up for it instead of charging it. I would be earning interest in the money I was saving instead of paying interest on the money I had borrowed. ( %5 interest earned plus 15% interest saved) And I could sleep well knowing I was not in debt to anyone. I always remembered that lesson, and I strive to never be in debt. Of course I have passed that story along to my kids.

Another success came when we were going on a vacation. We were tired of the kids asking for goodies at every gift shop and store we went into. Before we left for our vacation we gave each of the kids a ten dollar bill and told them that this was their money to spend, when we went to anyplace and they wanted to buy something they would have pay for it themselves and any money that was left over they could keep. The kids were quite young they were thrilled at having so much money. On that trip when the kids would ask for something all we would do is ask "do you have enough money for it?" It worked wonders! No whining or begging! The kids stopped bugging us for things, they learned about money and how to make good choices, the kids came home with money in their pockets, and it saved mom and dad some money also.

Don't let society's messages "things give you happiness" and "you should have instant gratification for the things you want", be the only source of learning about money that your children receive. Don't be afraid to talk to children about money.