Money Skills for Kids

Lesson 3: Elementary & Middle School Children And Money

Creating an atmosphere of family team spirit

As your children get older, and especially once they enter the junior high school years, it is imperative that they understand that functioning within the family also means understanding the financial obligations of the family. Many families believe that hard figures, such as how much mom and/or dad bring home each month, should not be discussed with children. There is no hard and fast rule to that; it depends on your comfort level. Whatever you decide, be certain to impress upon your child that money matters are private and that not every family you know has the same amount of money coming in or going out.

Now, however, is the time for the child(ren) to understand that the water that comes out of the faucet and the heat that comes from the grate in the wall or floor are not free. Use some monopoly money and put it in various piles denoting the monthly family expenses. Such expenses should cover rent/mortgage, food, utilities such as gas, electricity, water, trash pick-up, cable/satellite TV, Internet/DSL, gasoline, automotive expenses, etc. Explain to the child the differences between fixed and varying expenses. For example, the child(ren) must understand that the rent is due each month, without fail. Explain that if you would not pay the rent, then the family would have to move out of the house/apartment. Go through each expense and explain what would happen if you did not pay the bill for this certain expense.

Now show the child the pile of monopoly money that is left after all the expenses, savings, and charities are taken care of. Chances are, it is somewhat small. Now recall some of the latest of your child’s “I want”, “I need”, etc. statements and explain that what is left over is all the family has to work with to purchase extras. Now explain the prices of the items your child lately desired. If, for example, s/he requested a pair of boots at a staggering price (to keep up with the other kids), show how much money these shoes would use up. Explain how similar shoes (without the brand name) would serve her/his purpose just as well, while leaving more money in the family budget to spend on a family outing, or another desirable event.

Using this model of “tangible” cash counting, the child will begin to understand that the cost of a pair of brand-name shoes may be equal to, or sometimes even exceed, the cost of the family’s entire food budget for a week. Such objective figures speak louder than parental admonitions that the shoes are “too expensive” or “not worth it”.

At this age level, it may also be a good idea to begin involving your child in simple budgeting decisions. What kind of a vacation should the family take next year? Which hotel should the family stay at? The inexpensive one that is a chain hotel, or the one that is slightly more expensive but also has a pool and is closer to downtown, so the gasoline bill would be less?

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