How to teach kids the value of money

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How to teach kids the value of money

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Parents often ask: "How do I teach my kids the value of money? They lose things, they want to replace, they don't understand the problem." It turns out that often the teaching isn't with the children, it's with the parents, because children who don't experience consequences have no reason to learn that there is anything that's terribly valuable and it's important to remember that children don't know. My favorite question to ask these days of children over 13, is: "What do you think the utility bill was at your home last month?" The most frequent response I get is: "$10,000". Now, I get that number because children have no context, they don't understand the value of money, they don't understand what things cost, because their parents aren't transparent. Now, we're not transparent because we're not sure what kind of information we can trust them with, but it turns out, in order to understand the value of anything, you have to understand it in context. If I know that my bicycle cost $300 and the family budget for transportation is only $20,000 for the year, I know what portion I have and if you tell me what the car cost, I can put it all together. So, what we find is that teaching kids the value of money is really about transparency and about the parents' willingness to set limits and stick to them. If they lose something, it doesn't just get replaced, they have to earn it. If they want something really badly and you think it's an indulgence, they have to earn it, they have to save for it. So, it turns out that it's not that children just don't know the value of money, it's that there isn't a conversation in the family yet in which they can put the things they have in a content of what's important or not.

Learn more about teaching kids value of money. Watch our free video for expert advice.

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Expert Bio

More from Expert

Joline Godfrey

CEO of Independent Means

Joline Godfrey is the CEO of Independent Means and the author of Raising Financially Fit Kids; Our Wildest Dreams: Women Making Money, Having Fun, Doing Good; No More Frogs To Kiss: 99 Ways to Give Economic Power to Girls; andTwenty $ecrets to Money and Independence: The DollarDiva’s Guide to Life.

A clinical social worker by training, at the beginning of her career, Godfrey was an executive of the Polaroid Corporation where she provided in-house family and therapeutic services to officers and employees. One of the first women in the nation to manage a spin-off from a Fortune 500 company, she launched Odysseum, a spin-off from Polaroid, and sold it in 1990. Odysseum was a creativity training company serving other Fortune 500 firms.

Godfrey is a graduate of the University of Maine and Boston University and was awarded an Honorary Degree in Business from Bentley College in 1995. She was a Kellogg Leadership Fellow and the recipient of the Leavey Award for Excellence, as well as the Beta Gamma Sigma Entrepreneurship Award.

Recognized in features for The Today Show, Oprah, Fortune, Business Week, The New York Times, and more, Ms. Godfrey is a frequent speaker and consultant worldwide. Godfrey grew up in a family business in Maine and lives in Ojai, CA.

More Parenting Videos from Joline Godfrey >
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