Money Doesn’t Grow On Trees

Children sometimes think it does.  As parents we often become impatient when our children seem to have no awareness of the cost of many things they want.  They also seem to make no connection between the money it takes to buy these things and the work their parents do.  Where do they think the money comes from? 

These days there is new interest in teaching children some of the facts about money. But is not only the children who are confused about money – we, their parents may be as well.  The economic explosion of these past years has created an awareness of the widespread nature of our financial illiteracy.  Too many people took mortgages on their homes without reading or understanding the fine print.  True of credit cards as well.  The saying is, “money talks”, but too many of us – adults and children alike – don’t understand what it is saying.

Last week I heard an excellent panel presentation on the topic, “Banking on our Future: Kids and Financial Literacy.”  Banking on our future means we need the present generation to be more knowledgeable about finance if we are to avoid a similar economic meltdown in the future.  To this end, two of the presentations were about efforts already in place to begin this needed financial education.

Dr. Alice Wilder, Head of Research and Education for Blues Clues, and PBS Kids Super Why, showed a cartoon in a series she produced on financial literacy for the Cartoon Network Asia.   (Wouldn’t you know that the Chinese are already on the job?)  Cha-Ching (www.cha-ching.com)  is a financial literacy program that “provides a platform for 7-12 year old children to learn (with the help of their parents) the knowledge, tools and practice they need to make informed financial decisions to reach their own personal goals and dreams.”  The cartoon she showed was based on the theme, “Earn, Save, Spend, Donate”, and follows the journey of a dollar bill from its printing at the mint until it reaches one’s pocket.  It is wonderfully graphic and explains things in a way children can easily understand.

Also on the panel was Ramon Gonzalez, the Principal of the Laboratory School of Finance and Technology, a middle school in the South Bronx, N.Y.  He described a program they have called “School Bucks”, which is most innovative.  Children are given an amount of money – specially made paper money – which they can use to buy things in school that they either need or want.  Each child has a bank account, where interest accrues if they save their money,  just as in a real bank.  They keep track of their balances, learn to make choices and experience firsthand the value of saving.

Programs like these point up how important it is for children to be taught explicitly about money just as they are taught other basic subjects like reading and writing.  Sometimes we don’t appreciate that, and may feel resentful when our children keep asking for things without any recognition of how what they want relates to everything else our money has to provide.

Just as with other kinds of behavior, the challenge for us as parents is to remember that children can’t know something without learning about it.  Our job is to think of ways to teach them.  A familiar approach is one of giving an allowance.  Families use this in different ways.  For some parents it is a way of teaching children about saving and the purpose of the allowance is to put it in the bank a child may have.

When an allowance, or money a child earns from chores is the child’s to spend or save as he or she wishes, there may be unintended consequences.  What if the child wants to use it for something of which the parents don’t approve?  Or suppose there is  an agreement beforehand that the money is to be saved to buy something the child has wanted and then it becomes too hard to wait?  Now the parent is being begged to buy it before the money is all there.  It is useful to establish some ground rules, or to think through ahead of time what one’s attitude is about these kinds of questions in order to be prepared to deal with them if they arise.

Like everything else in a child’s development, judgment is needed and an awareness of where children are in their development.  Two and three year olds, who are still struggling with impulse control, will probably not be successful with a plan that requires too long a waiting period, or making choices between tantalizingly desired objects.  This is where parental guidance and remembering to stay in charge is needed.

At whatever stage of development, children need our emotional support while learning.  They will make mistakes – haven’t we all?  They will learn better if we sympathize – rather than criticize.