How Do Kids View Money?

How kids view money is not an idea that occurs to most parents. Ever wonder why children are so carefree with their money? Children treat money the way they do because children think about money in a different context than adults. Let’s face it, getting money as a child is easy—a smiling adult hands out cash and says, “Go have fun.” Now, when was the last time that happened to you?

In our society, kids usually don’t have to earn money; someone gives it to them. Kids don’t have to pay bills; parents take care of them. To kids, money is a treat, sometimes received regularly, sometimes not. It should be no surprise that kids see money as a gift to spend anyway they want.

Most adults have to earn their money. There is no one out there giving them handouts. (Although, some will argue that our government is trying more than ever to do so.) Regardless, an adult looks at money knowing that it usually has to pay for choices made in the past, as in, “Can I make the full mortgage payment this month?”

On the other hand, kids get money from parents and relatives who control the purse strings so, to a kid, their money is for the future as in, “What will I buy at the mall today?”

There’s nothing horribly wrong with this picture. As parents, we enjoy seeing our children have fun and nothing says “fun” like having money to spend. The reality is that kids and adults view money differently because they get it from different sources and have different motivations for how they spend it.

However, when we casually dole out money to our kids, while at the same time taking care of their financial necessities, we enable them to develop freewheeling attitudes about money. In doing so, we are not preparing them for the reality they will face as adults, where they have to work and make decisions about paying their bills before they can go the mall to spend for fun.

Let’s consider the driver’s license analogy again. We can agree that getting behind the steering wheel is the fun activity that our kids relate with driving. However, as parents we know our kids need to learn the rules and practice the skills of driving. If not, we fear they could have an accident. We also unconsciously know that through practice making good driving decisions our kids will change their attitude about driving. They will begin to understand and appreciate the responsibility of having a driver’s license.

Learning to manage money requires the same practice in developing skills. Without practice using money for more than just fun spending our children will not have the opportunity to change their attitudes about money before they become adults.

So, how do we start helping our kids realize that there will be no money tree when they become adults?  There’s a lot of advice and information out there about how to teach kids about money. Next time we’ll look at the various ideas and see how well they prepare our kids to become financially competent as adults.

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