Last week, my son wanted to buy the
Star Wars Transformer he's been eyeing for the last month. My wife finally relented and they went to Toys 'R Us. My wife called me up and told my son to talk to me to see if I'll allow him to buy it. I told him that he can buy it as long as he pays for it. Being 4 years old, he doesn't really understand the concept of money and exchange yet. But I thought this might be a perfect way to teach him the value of money. So my wife paid for it and I told him that I will take the money he spent for the toy from his piggy bank.
So last night, I sat him down and we counted out the money he spent. At first I took out the the Dollar coins and quarters, but when I counted out $22 worth, it barely reduced the content of his piggy bank. Since he's only beginning to learn how to add, it's a little difficult to get him to understand if I took the actual amount. So I decided to count out the pennies and nickels instead, now we're talking! After counting out $22 in pennies and nickels, 3/4 of his piggy bank is empty.
I told him, "Ok, this money is how much your toy is, I'm taking this now since you said you'll pay for your toy". At first he was ok with it, I realized he didn't understand that it meant the money is gone for good. So I said, "this money is mine now and I'm taking it away". When I started taking away the money, that's the only time he realized that his money will not be returned to him and he started looking sad.
Since he still had some money left in his piggy bank, he was sort of ok with that. I realized that he still didn't get the concept on how money is used and its value. So I asked him, "do you want to buy another toy?" He said,"tomorrow we're going to use this money to buy another Star Wars Transformer". Of course, he was excited, which is not the reaction I wanted. I repeated it and told him, I will take this money to buy your toy and you will not have anything left in your piggy bank. He was still ok with it and said yes, he wants to buy the toy.
Finally, after about 15 minutes of doing this, I finally said, "Ok, we'll use this money to buy your toy, and I will take this money away forever and you will have no money left. Also, you will not be able to buy a bigger toy because you won't have money to buy toy. That means, you'll have no toy for Christmas since you already used up all your money." When it finally sinked in to him that he will be on the losing end of the deal, he started crying and said no, he doesn't want to waste his money. So I asked him one final time, "what do you want to do with your money? Buy toy or save it", he said, "save it". Success!
I told him that was a good decision and that from now on, here is what we're going to do. I gave him another piggy bank and told him, that from now on, he'll have two piggy bank. One for savings and one for buying his stuff. He must always put money in both bank whenever he gets them. When it's full he can use the money for spending to buy anything he wants.
Counting out the money and repeating to him whether to spend or save the money took the better part of an hour, I think though that it was time well spent and I hope it is a lesson he takes to his adult life.
Seeing as how many children and some of my friends nowadays seems to have an entitlement mentality. They don't seem to see the value of money as much since they seem spend their parents money any way they want and having everything they want just given to them. I don't think it's a good way of raising a financially responsible child.
My friend and I have been talking about how to teach children on how to be responsible about money and one of his ways was to actually give his son who is 6 years old some money and buy something he wants. On one occassion, his son wanted to buy some juice in the mall that cost P40, seeing as he only had P20, he decided to get a smaller size. Since the smaller one still cost P30 and seeing that he still didn't have enough money. He decided to just keep his money and kept walking, albeit with a frown on his face. They finally decided to buy the juice for their son since what parent can bear seeing their child sad?
But that is an excellent way to teach a child about money and giving them both the satisfaction of saving as well as spending their money so they learn how to budget their finances.
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