In a survey by the financial services provider Santander, 500 parents were asked about the age they believed their children understood the concept of money and its value, and the study yielded some pretty interesting results. On average, parents believed their children had begun to understand the value of money by age 10. Interestingly, 7 percent of the parents surveyed believed that their child was ready to grasp the value of money as early as 5 years old.
How can you actively teach your 10 year old the true value of money? Kids can learn the importance of saving (and budgeting) their own money by what they observe in your actions as a parent and by practicing responsibility with money at home, such as being careful with their allowance and taking on paid chores etc.
Some parents may feel that their kids can learn about money once they reach their teens or perhaps allow the school to teach them, but it is unwise to let them learn their early financial lessons from someone else. Setting smart money habits now will benefit your 10 year old for years to come and ensure they leave home more independent than many of their peers. If you’re not sure where to start, check out the following tips on helping your child have a better understanding of money.
Helping a 10 Year Old Understand Value
For a 10 year old child to have a chance of understanding why money needs to be taken seriously, it can help to make sure they understand the meaning of the term ‘value’ in the first place. Communicate to your child that if they care about something, they value it. If they care about their grandmother, for example, they value her. If they care about getting good grades, they value their education (as much as they may hate school sometimes!).
While money has far less value than family or education, your child needs to know that some people value ‘things’ such as homes, cars or – to speak your child’s language – ‘toys’. And if they want the latest toy or gadget it also means they value it, and money is the key to getting this toy. Your 10 year old may not be able to grasp the dull ‘grown-up’ ins and outs of saving up for a mortgage deposit, but they can grasp saving up their allowance to buy the toy they love, and you can help them have a clearer understanding of this.
A great first step toward teaching your child about the realities of money and how it is earned is to teach them the difference between wanting things and needing them…
Teaching Want vs Need
As grown adults, we are often guilty of justifying an unnecessary ‘want’ purchase as a ‘need’ purchase from time to time, so we need to be extra careful that our own kids recognize the difference when they start using their own money. So how do we teach young children not to squander money in the same way? “By putting spending decisions into a context your child understands”, suggests clinical psychologist Dr Elizabeth Kilbey. The next time your 10 year old asks for a new games console or similar high-price gadget for instance, start by explaining how long it takes mom or dad to earn the money to pay for that console.
An $800 console, for example, may be equivalent to one whole week of work for mom or dad, and if you were to spend a whole week’s earnings on a games console, you would have nothing left to pay for food or the bills that go toward your child having a comfortable home. When you lay out spending money in this way, it puts wanting and needing an item into perspective. Getting what we ‘want’ in life doesn’t come quickly (or easily), but if we save up and delay our gratification, then that games console or iPad will be worth the wait.
Don’t be afraid to say NO
Outside of Christmas and birthdays, every child will try and push the boundaries and plead for an item ‘just because’, but to keep these as “just for fun” purchases, it’s important that parents don’t cave in to every request. If you’re trying to teach your 10 year old about valuing what money you have and spending it wisely, buying them a toy on every shopping trip will invalidate your argument and cause them to repeat these money mistakes in their future.
Telling your child “NO!” in the mall should also be accompanied by a gentle reminder of the cost of the item in terms of hours or days worked. Explain to your child that you may have resisted buying a ‘want’ item yourself this month such as a new pair of shoes because it is irresponsible to spend more than you have. The more you demonstrate in your words and actions that money should be used carefully and not thrown at ‘want’ purchases, your child will pick up on what it means to delay gratification and sacrifice certain things they ‘want’ in the moment for things they ‘need’.
If your child wants an item badly – whether this is a smartphone or concert tickets – they need to realize that earning the right to buy these things will be more gratifying than simply having the reward given to them. So the next step is to help them practice managing their own money by offering them a small allowance in exchange for doing chores or getting a summer job.
How much allowance should I give my 10 year old?
A helpful guide for setting your kid’s allowance can be to match up their age with the amount you give them. So a 10 year old may receive $10 per week or per month and a 12 year old $12 and so on. Some parents may feel that $10 per week is too much for their 10 year old or may prefer instead to pay their kids on a chore by chore basis – this is completely up to you.
Your child’s weekly or monthly allowance will also be dictated by your personal income, so try not to be influenced by how much your child’s friends may receive for their allowance – you can only spare what you can afford. Remember that a child’s allowance should be – first and foremost – a practice tool for managing money, and they will learn to save and budget their money however much you give them. The amount of weekly or monthly allowance is not as important as how they use it.
Age appropriate chores to earn allowance
Kids between the ages of 8 and 10 years old could earn their allowance by completing some household chores, such as:
- Fill and empty the dishwasher
- Fold and put away laundry
- Help with dusting around the house
- Help with vacuuming
- Taking out the garbage
- Help with weeding the garden
- Help washing the car
- Walk the dog (or a neighbor’s dog)
- Babysit a younger sibling
- Make their beds
- Keep their bedroom tidy
To encourage your child to keep earning their allowance, it can be a good idea to let them keep track of their chores with a fun wall chart. Keeping this chart in the kitchen or their bedroom can be a great way to motivate them and can serve as a handy reminder for parents so you can make sure everyone is doing their fair share of the housework (especially if you have more than one child!).
Tips for Teaching Them The Value of Money on a Regular Basis
Watching your child earn their allowance through household chores or a summer job is great, but once summer is over and housework is replaced by homework it’s important to keep their money management skills sharp with a few regular practices. Before you begin, however, it’s important to note that the same methods will not work with every child. Lessons in financial responsibility need to be set according to your child’s age in order for them to fully appreciate your teachings, suggests Dr Elizabeth Kilbey: “Young children are not miniature adults. Lessons should be tailored for their age rather than just made simpler.”
So what can be appropriate lessons in managing money for a 10 year old?
Take them to the bank – Whereas you might teach a 3 year old about the concept of money by playing pretend shop or bank, your 10 year old is mature enough to be trusted with their own allowance, so it may be time to take them into a bank and let them open their own savings account. Once their allowance outgrows their piggy bank, they’ll need somewhere safe to store and manage their savings from paid chores and from Christmas/birthday payouts. If you take them directly into a bank, they can talk to a bank employee about how interest works and the perks that come with saving from a young age.
Let them assist in a yard sale/online sale – If you’re having a traditional yard sale after a spot of spring cleaning (or even just selling a few items on eBay), enlist your 10 year old’s help with it too and give them some hands-on experience of setting a price, haggling making a profit etc. Your yard sale may even include some of your child’s old toys so they can have a say in how much the items are worth (within reason!). You can let your 10 year old take the customer’s change, help them set a price and even encourage them to haggle with the customer – particularly if the toy they’re selling was a childhood favorite!
Finally, to ensure you are doing all you can to teach your 10 year old the value of money and how it works in the real world, take a look through some of the following Dos and Don’ts surrounding financial responsibility…
DO’s and DON’Ts of Teaching Financial Responsibility:
DON’T argue openly about money issues with your partner – According to research by the University of Cambridge, kids can begin to form their attitudes toward money by age 7, and something they can pick up on even sooner is stress in their home. When money and stress is combined, this can be a destructive recipe for your child to be part of, so try to avoid arguing about money worries or the negative aspects of money in front of your child.
DO be an example to them – Kids watch what your actions as much as they listen to what you say, so be mindful about your own bad money habits around them (if any). If you’re guilty of adding some brand new clothes or another impulse purchase to your regular grocery shop, for example, or if you grab a take out coffee every morning instead of making one at home, your child will start to notice these behaviors and accept them as normal attitudes to money, so just be wary of what you may be passing on to them.
DO take them with you on grocery shops – Sure, your 10 year old won’t be keen to abandon their video game or TV show to join you on every shopping trip, but make sure you are taking them on every BIG food shop (the one you do every week or maybe every 2 weeks). Not only will you have an extra pair of hands to help you tick off your list quicker, but with every item ticked off, your child has the chance to learn in person just how much certain items cost and what you’re really paying for.
Doing the grocery shop together also gives you the opportunity to teach them value by ‘comparison shopping’. So instead of simply asking them to find an item on the list, get them to read the labels on products with you and assess: is the amount I get in weight/volume worth it for the price? Are they cheaper alternatives that offer the same amount? If your child loves a certain brand, ask them to experiment by switching to a cheaper brand for one week to see if they notice a difference – this can be a simple way of teaching them to be flexible with their own money and that big brands don’t always equal best.
DO teach them to give back – Teach your 10 year old that having money isn’t just about saving and budgeting it for your own interests, but that those with money also have a responsibility to share their good fortune with those who are less fortunate. Encourage them to choose a charity that they could give a portion of their savings to every once in a while. It doesn’t have to be as dull or cut and dry as simply donating a figure to charity either – why not help them organize a bake sale with their friends or siblings? You could even help them organize a sponsored sports event of their choice to help raise a charity fund as this can be an amazing way to teach them the importance of giving.
Mike Zhang. Founder of FamilyLifeShare