Do you know why your toddler doesn’t care about money? Because he can’t eat it! But it’s easy to teach a child money mastery, even if you yourself don’t feel like a master.
Money is a conditioned reinforcer – something that you have to learn to like. A primary reinforcer is something that you like naturally – like food, hugs, praise, and fun.
The reason people get
addicted to money is because it gets coupled in their minds with access to
whatever primary reinforcer they like, no matter what their taste. You don’t want your child to be dependent on
money for fun, or they lose their power over it. Instead, make it fun to grow money as an end
Earning and Exchange
Game #1: You can teach a child how to earn before he can form full sentences. When you’re close to your toddler, show him the palm of your hand and hold it still. After a second or two, the toddler is very likely to reach out and slap or touch it. If he does, say, “Right!” and give him a plain Cheerio. He’s just learned his first lesson in earning “money.”
How it works: Offering the palm is a cue to perform a behavior. If the child happens to do what you want, you give him a conditioned reinforcer: the word “Right!” (It can be any word, but you need to always use the same one.) Then give the primary reinforcer immediately to couple the two in his mind.
With very small reinforcers, you can play this game over and over and he won’t get so full that the Cheerios are no longer reinforcing.
Principle: A paycheck is simply a conditioned reinforcement for an employee performing desired behaviors. The primary reinforcers are the food,
clothing, shelter, etc., that they buy with the check. When a child hears “Right,” it’s like getting
a paycheck to buy a Cheerio. Knowing what
he did to win gives him power to do it again.
Game #2: Teach a child what it means to trade. Let your child find something that you planted around the house for her – say a toy duck. Ask her where she got the duck and offer to trade her for it. Practice making offers and counteroffers for various things that you two own.
How it works: You’re really teaching three concepts essential to understanding money: mine, yours, and exchange. You will find that the desirability of an object has little to do with the actual monetary value. Laugh a lot, as she may be disappointed that she can’t trade her duck for your antique pearls.
Principle: What is
worth? The market is based on what
people want. If I want something more
than the money in my pocket, then I’ve found a good deal. And if the vendor wants the amount of money
I’m offering more than the object she’s selling, then she’s found a good deal,
too. The game teaches this principle experientially.
Teaching a child about how to earn and save money doesn’t do any good if you never teach her how to spend it. Remember that money is not a primary reinforcer – she will get tired of collecting it if she never gets anything she really wants.
Game #3: Pull out a treasure box and let your child buy something.
How it Works: You can change the quality and selection of toys, have the same or different prices for each toy, or use other items like raisins. Work the “sweet spot” – where the choices are really desirable, and the game isn’t too easy (boring) or too hard (unattainable).
Principle: Getting your
kids enthusiastic about the power of money is much more effective than
guilt-bombing them about how hard you worked to earn it. They will also realize that their behavior
gives them some power over their outcome, which inspires confidence.
Game #4: After the kids have over $1.08 in their piggy banks, let them know that they need $1.00 plus 8 cents sales tax to buy a toy at the store. (Obviously the tax will vary.) Take them and their piggy banks to a one-dollar store and let them pick out their own toy. Let them pay, either by presenting the piggy bank or the cash to the checker, whichever suits their age.
How it Works: The kids earned the money, freedom of choice, the experience, and learned to allow for sales tax!
Principle: There is nothing kids want more than independence when they feel they are ready.
Their natural pride in taking
care of themselves will serve them as adults.
Children need to understand that different coins and bills have different values.
Game #5: Show your young kids an apple and ask, “How many apples do I have?” They will say, “One.” Try cutting it in half and ask, “How many apples do I have?” They might say, “Two.” Try putting the two halves together and showing that it is still one.
Try drawing a dollar, cutting it up into quarters, and matching each piece with a real quarter. Then put the cut-up picture back together and remove the quarters. If you’ve been reinforcing your kids with pennies, buy them back with other coins. When they’ve collected a lot of quarters, buy them back with dollar bills.
How it Works: Work it like a magic trick, using flourishes and songs to make it fun.
Principle: The adults
who have the most trouble with money also claim to be bad at math. Giving lighthearted lessons makes it easy to build
your child’s confidence and competence.
Teaching your child about money will help you enormously in certain situations.
Game #6: Say your five-year-old knows how to get dressed, but dawdles and makes it hard for you to meet the schedule. Try offering 2 cents if she gets her pants on “…by the time the big hand hits the 6.” If she does, say “Right!” and pay her. Then give her another challenge: to get her shirt on by the time the big hand hits the 8.
You might need to remind her at first, but it will soon become routine for her to win. If not, she either doesn’t understand what money is, the primary reinforcers aren’t good enough, the environment is too distracting, the job is too hard or too boring, or the job might be “poisoned” due to previous scoldings. Play with the combination until it works, or try another job with a better chance at success.
How it Works: The child already knows how to dress, but offering a prize makes it fun for her to comply.
Principle: There are
some things that people can do well, but don’t feel motivated to do. The promise of a reward might just be the
thing that supplies the motivation.
Millions of people go to work for just that reason. The art to this game lies in your ability to
learn from your child as to what is reinforcing and what is not, and what she
is capable of doing.
Game #7: Allowance is a great way for older kids to learn to earn. They can get a base allowance that either calls for doing household chores or doesn’t (your choice). But to get something more, your child can do a chore that’s above and beyond – maybe something that you would have hired someone to do.
How it Works: The trick is not to guilt-bomb them into doing the extra chore when they don’t care about the money. The trick is to make your child feel that he or she has power over his or her own finances. A teenager might not care about money at all during some weeks, and might want plenty of it in other weeks, depending on what’s going on socially. Never allow your teenager to think that you are the only source of money. There are always neighbors who need work, part-time jobs, and creative ideas. A teenager might organize volunteer groups and angel sponsors; hold yard sales, offer trash hauling services, etc.
Principle: People are
genetically geared to survive, and teenagers will become incredibly creative
when they really want something and need the money to pay for it. You don’t have to be the money supplier, but
will probably want to supply some encouragement and admiration for trying. A teenager needs to try ways to make money and
then evaluate the outcome, win or lose.
Game #8: Give each child at least two containers for coins, marbles, or whatever you are using as a conditioned reinforcer. Label them with at least two names: “Income,” and “Savings.”
As your children earn coins, you can ask them to alternate which container to drop the coins into. You decide on the ratio.
How it Works: The “income” jar will be used for buying things, but the “savings” jar will never be spent. It will be used to open a savings account at the bank, and that account will simply continue to grow and the actual net worth of your child will increase for the rest of his/her life.
According to financial advisor Fredric Lehrman, a savings account is not for emergencies or for saving in order to buy something. It is for altering your own gut-level opinion of yourself, and that changes everything. When you know that you can’t dip into your savings account, you literally find ways to earn more money, you learn to wait or pass on purchases, and you invest wisely. But you always feel valuable.
When your child wants something and gets tempted to use the savings, laugh and say something like, “Silly – that’s your savings account!” Encourage him to find another income stream or look forward to having enough in his “income” account. And set up your own savings account, even if it’s only 2 cents in a jar and you only add a penny a month. Nothing speaks louder than example.
Principle: Although Lehrman
suggests using 5 discrete accounts for adults, try using just two for kids and
add complexity as they get older. There
is no substitute for this strategy, as people who raid their savings to solve
emergencies have to literally start over every time they have an
emergency. A nice variation on this
theme is the Three Jars concept: Spending, Saving, and Giving.
Game #9: When a child wants some dolls while you’re saving to take the family to Disneyworld, make a game of imagining the fun of having both. Tell her that she can have the dolls when she earns enough money, but get out some paper and start sketching Mickey Mouse right away. As you draw together, talk about the upcoming trip and how much fun it will be when you both get what you want. Dissolve any anxiety into the fun of being together now.
How it Works: The rare child who can delay gratification is much more successful in life. Rather than argue over the dolls, teach her to delay gratification in a very soothing way.
Principle: We need to be
at peace with the process of waiting for things that we want, and spend our
time looking forward to them instead of agonizing over what we don’t have. That way, we’ll enjoy money more as it comes
Even a toddler can understand what interest is. The trouble is that parents try to teach the evil of borrowing money and having to pay back more than you borrow. Try teaching it from the opposite angle instead.
Game #10: Ask to “borrow” money from your toddler. Say that you want to use it for awhile, and that you’ll pay it back with interest. You can even write him an IOU to put in his piggy bank until you pay the money back. Then he gives you a little money out of his bank and you go away. In a few hours, say you’re done using his money and you want to pay it back. Return the money plus a little extra.
If your kid is really young, you might try taking a picture of the money that you took. When you bring back the money, he’ll be able to compare it to the picture and see that you brought the exact amount back PLUS a little extra. You can let him spend the interest right away if he wants, or put it in with the rest of his money. (If he got 2 cents of interest, he could buy one M&M.)
How it Works: Play this game no more than once a month, as the intellectual understanding will come over time. The real magic is the priceless sensation that money can work for him instead of always having to work for it.
Principle: Over time, he will appreciate the value of having money on hand to invest for profit. And “interest” won’t be a dirty word. He might start asking his uncles and aunts if they want to borrow money.
I hope you have fun teaching
your children about money. Currency is
supposed to make our lives easier, not harder.
When you have fun teaching about money, you learn as well.
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This is an impressive and well thought out article. Parents have several options when it comes to teaching their children about money, but it's crucial that kids (of any age) get the concepts early. I especially like how you keep reflecting on money as a primary reinforcer. If taught the correct way, these concepts are going to change everyone views their money and (hopefully) will help to not have so much debt. Excellent article!
Wow! This is one of the best articles I’ve ever seen on the topic. I’ve seen some a few of these ideas before, but a lot of them are truly original. With the economy being so fragile now-a-days it’s important that young children have an idea of how to spend money. I never would have thought of teaching toddlers how to spend money, but these games are a great way to do so.