NDSU Extension Service - Ramsey County


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Modeling Money

Modeling Money


          Children learn very early that you use money to get something in return.  They watch their parents hand over cash or use a credit card and see them receive something in return.  Money goes into a machine and out comes a can of pop, a movie to watch or even a candy bar.  While the concept that money has value is caught quickly, how we value money is a skill that takes years to develop.

          The use of money can help children develop skills such as saving, making choices, setting priorities, delaying gratification, sharing, and interacting with others.  Parents can promote good lifelong money habits by modeling and sharing how they use money now and plan to use it in the future.


          Saving is an important part of learning how to manage money. Many children learn about saving by having "piggy" or coin banks for any money they receive. Saving money can help children learn how to plan, develop patience, and learn how to delay gratification.   So whether you give your child an allowance or money for doing something in particular, this is a good way to work with him or her on saving.

          If you give your child an allowance have your child save all or some of that money and decide when (once a month, or every two weeks) the saved money can be spent on something special.  If you do not want to give your child an allowance allow your child to earn money for chores or other activities that you choose.  Again, agree that some or all of that money will be saved or used at a later time.

          Many banks have savings accounts for children. You may want to consider opening a savings account for your child and working with him or her to make deposits and keep track of savings as they grow.

          Using money involves making choices. You start with a certain amount of money to spend and you make choices on how to spend it. When shopping, let your child observe how you make choices. Explain briefly why you decided on Brand A versus Brand B. "I could either buy this soap which smells good, or buy these two soaps which are on sale and will save me money." Allow your child to choose items sometimes when you are out shopping together. Offer a choice of two items that you would agree on, and then allow her to choose one of them.

          No matter what your financial circumstances or personal beliefs are on the use of money, you can help your child become "money-smart”.


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