5 Ways to Teach Kids the Value of Money

Plus: Field trips that boost their financial IQ

by Bambi Holzer

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Some of my most enduring childhood memories involve my mother taking me to the Bank of Lincolnwood in Illinois. Even now, I can picture her giving the teller my father’s paycheck and getting cash back — cash that she’d then use to purchase our family’s groceries and other necessities. I also recall watching my parents pay bills together every month. Even as a young girl, I understood that my father went off to work every day to earn money for our household.

Chances are good that you, too, brought your children along with you to deposit paychecks at the bank and make cash withdrawals. Maybe they also watched you balance the family checkbook and pay monthly bills. Perhaps they noticed as you put a coveted item on layaway at a store, or heard you talk about saving up to pay for a coveted item. They probably paid attention, too, as you counted out cash to buy gas and groceries.

But in this age of ATMs, credit cards, and direct deposit, your grandchild could be forgiven for not having a clue about cold, hard cash — where it comes from, and what it’s used for. In today’s online-banking society, there are simply fewer tangible, visual connections between kids and cash — and therefore fewer opportunities to teach them about money.

As a grandparent, you can play an active role in helping your grandchild make those connections. Here are a few ways to start:

Talk About Money

With your child’s blessing, of course, you can help your grandchild learn about money simply by discussing it. Talk about how Mommy and Daddy go to work each day to earn money for the family, or explain how you saved part of your paycheck when you worked in order to have money to live on in retirement. Keep the message age-appropriate, but help your grandchild understand that money is something you earn and use to live on.

Start a Habit of Saving

Even young kids can get into the habit of saving, and watching their nickels and dimes (or, when they’re older, dollars) add up. This can give any child a sense of accomplishment and satisfaction. Give young grandchildren a piggy bank as a gift and a little change to get them started, or help older kids start a money-market savings account at a bank. Search online with them to find the bank that offers the best interest rate — and explain to them what that means.

Take Financial Field Trips

The next time you need to deposit a check or get cash, skip the ATM and bring your grandchild with you to visit the teller. She might be amazed to discover that most banks are actual brick-and-mortar structures! This gives you an opportunity to teach your grandchild that you have to put money into your account in order to get money out. Of course, that lesson can apply at the ATM, too. Make sure your grandchildren understand that the nice little machine doesn’t simply spit out limitless numbers of $20 bills.

Or consider visiting these educational destinations as financial field trips. In New York City you can witness the bustle of Wall Street and visit the Museum of American Finance; in Philadelphia or Denver, you can take free tours of the United States Mint and watch coins being produced. Can’t get away? Take a virtual tour here.

Give Money-Smart Gifts

You might already be giving your grandchildren gifts of money, but you can also give them the gift of a financial education. Consider getting young grandchildren a book about money. Search Amazon.com books under “children’s books, money” for a list of available titles, including Nancy Loewen’s Save, Spend, or Donate? A Book About Managing Money (Picture Window Books, 2005) or Diane Mayr’s The Everything Kids’ Money Book: From Saving to Spending to Investing — Learn All About Money! (Adams Media Corporation, 2002).

If your grandchildren are older, consider giving them a consultation with a financial planner. I have clients who bring their young kids in and we briefly discuss stocks, bonds, and mutual funds.

Use Cash

If you do get money from the bank or an ATM with your grandchildren in tow, make sure they see you use it — at the McDonald’s drive-thru, toy store, or gas station. Show your grandchild how much cash you had, how much what you’re buying costs, and the change with which you’re left after purchasing the item.

Kids need to know the value of money, how it’s earned, and what it’s used for. By exposing them to actual currency you can help impart these lessons. So go ahead, show your grandchildren the money: You can give them a lasting gift without actually spending a dime.