All posts by Lynne L. Finch

“It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children to manage money as a number starting with kids as young as pre-school and continuing through high school.

Money Matters: Kids Walk Away Without Getting Change for Purchase

Kids are walking away without getting change for purchases.  Consider this comment from a parent,  “While leading a book fair at my children’s school, most of the children purchased books, but walked away without getting change.”  Really?

Here are my three reasons why don’t kids know that you can (and should) get money back when you give a cashier cash that adds up to more than the purchase price.

  1. Kids don’t see cash in action as much anymore. They see swiping and writing.
  2. Credit cards, debit cards, and checks are more commonly used to make purchases. No change. Nothing but a paper receipt with numbers on it.
  3. Kids don’t know that at purchase time it’s all about the numbers. If the cash tendered equals a larger number than the purchase number the difference is returned to the buyer.

This all adds up to the reality that today’s kids don’t know how cash works.

Practice getting change for purchase

Here are three things parents can do to help their kids understand how cash works. Hands-on experience with cash introduces and reinforces counting and math skills in a real-world seeing that makes sense to children. Doing activities with real money provides pattern recognition and makes math relevant to their daily lives.

Activity: Penny Exchange

For each child include a cash supply that includes the following: 100 pennies, twenty nickels, ten dimes, four quarters, a one dollar bill and a one dollar coin.

Instructions: Have your child exchange pennies from the cash box for other coins. Start with nickels, then use dimes, quarters, dollar coin, and dollar bill.

Repeat the Penny Exchange until your child can accurately tell you how much each coin is worth in pennies. When your child has mastered this activity he will be able to say,

“Five pennies is the same as a nickel. Ten pennies is the same as a dime. Twenty-five pennies is the same as a quarter. One hundred pennies is the same as a dollar.”

Money Talk:  Shopping with cash

“This shirt cost $15.00. Therefore ,if I use a $20.00 dollar bill that amount is more than the cost of the shirt. The clerk will give me $5.00 in change.”

Show your child the cash you give the clerk and the change you receive. You can also point out these numbers on the printed receipt.

Hands-on practice: Play Store

Give your child a $5.00 bill to purchase a book that costs $4.50. Pretend you are the clerk and have your child ask you if they will get change or not.

Your child might say, “This book cost $4.50. If I give a $5.00 bill how much change will I get?”

As the clerk you would reply, “You will get $.50 in change.”

Reinforce this by writing the numbers on a piece of paper like a receipt to show the math.

$5.00 (cash) – $4.50 (purchase price) = .50 (change)

By doing some show and tell with money and numbers you help your child understand how money works. As a result, your child is learning how to talk about money with other people.

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school and continuing through high school. 

Put Your Young Teen to Work Tracking Car Expenses

Want to make your young teen understand the cost of operating a car before getting a driver’s license? Here’s an activity that will get attention without a lot of effort on your part: tracking car expenses.

Set a mandatory requirement that your teen record family car expenses for several months or even one year before they get their driver’s permit.

To do this your teen will record and calculate costs taking into account gasoline, maintenance, loan payments, and insurance. The numbers can be tracked using a computer spreadsheet or paper log.

At the end of this project your teen will have prepared and presented several monthly expense summaries and one final summary that shows the actual cost per mile for family vehicles.

Car Expense Tracking Agreement

I ____________ will keep a Car Expense Log for each family vehicle for _____ months. I will provide a report to my parents each month. At the end of the final month I will present a report showing the cost per mile for each vehicle including account, maintenance, loan payments, and insurance.

Signed ____________________    Parents _________________________   Date ______________

Sound impossible? Not if you continue to reinforce that this is a non-negotiable requirement for getting a driver’s permit. You can sweeten the deal if you like by paying a fee for each report as a way to supplement your teen’s allowance.

This is a designed to be a self-directed project. Consequently, if he does not gather the information and present the reports then you as a parent can  delay application for driver’s permit until the project is completed.

Your teen is responsible for this project but will need the gas purchase receipts. One way to gather them is to keep an envelope or small clipboard in the car. Amounts for maintenance, insurance and payments can be provided from your statements.

Why this is a good learning experience for your teen.

  1. Uses real numbers that are relevant to a teen’s life
  2. Develops responsibility for keeping records
  3. Requires calculating costs based on various criteria
  4. Enhances what a teen may learn in school about car loans and insurance
  5. Creates a mental picture of what it costs to operate a car

Here’s a sample spreadsheet and information about the entries.

tracking car expenses
Teen tracking car expenses for family vehicles

Odometer
Start with the odometer reading on day one. Whoever fills the car writes the odometer number on the receipt. If this is not convenient your teen can get the reading from the car on day one and at the end of each month. The numbers will be less precise but the calculations are still educational.

Calculation: Miles traveled

  • Subtract current reading from previous number

Record numbers from receipt

  • Gallons purchased
  • Cost per gallon
  • Total cost of purchase

Calculate: Cost per mile

  • Divide total cost of purchase by miles traveled

Receipts for Maintenance

  • Keeping track of these during each month helps show how car expenses can skew a monthly budget and will need to be accounted for in the final cost per mile calculations.

Statements for car payments and insurance.

  • These are generally regular payments that can be added to the calculations at the end of the year.

Explain car insurance

Make sure your teen knows how much the insurance bill for the family is increasing when they get their driver’s license. Call your insurance company to find out what happens when you add teen drivers to your policy.

Not only does the insurance increase with a teen driver but there can be another catch. We had three vehicles with two adult drivers when we added our first teen. Surprise! She had to be listed as the primary driver of one of the vehicles, triggering another increase.

Annual expenses for family vehicles
Annual expenses for family vehicles

Note that in this example the totals totals show costs with and without payments. At some point there may need to be a cost/benefit analysis when the maintenance on a paid-up vehicle approaches that of monthly car payments.

Summing Up
Knowing car operating expenses is a real-life example that teens can relate to. The cost per mile is the most instructive. Your kids can see how much an extra trip to the mall costs. As a result, when you teen owns a car he or she will not be as surprised when the numbers start to add up.

We used our car expense information in a negotiation with our daughter who wanted to take a part-time job at a mall 20 miles away. We’d agreed that she could drive our car if she reimbursed us for the cost per mile. She quickly realized that after she paid the commuting costs she could not earn her share of her college expenses and made the decision to find a job in town. Lesson learned.

Even before your teens are old enough to drive, help them understand that every mile has a cost. Learning how much it really costs to own and maintain an automobile is a good lesson that you can provide in your home at no cost to you.

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school and continuing through high school.