The Magic Money Game - Part One
Posted on November 17, 2006
Many parents spend a great deal of time teaching children in their early formative years to feed and dress themselves, they potty train them, and get excited as they learn to walk and talk. Then around age five, children enter kindergarten and parents often miss a golden opportunity by abdicating much of their teaching responsibilities to school teachers. Sure, they may help with homework, encourage them to read and offer enticements for good grades, but many fail to use this time, when the children can be molded like a piece of clay, to teach them about financial responsibility.
You may wonder how you can teach elementary school children financial responsibility when many haven’t even learned to count. How can you teach them to handle money when they can’t even make change? Well, believe it or not, young children can learn and learn a lot. Granted their math skills may be lacking, but you can bet they know it takes money to buy things and without it they can’t.
In a recent article I took our public education system to task for turning out financially illiterate graduates; ones who don’t understand the effects of credit, who can’t balance a checkbook or prepare a budget. Well, we can’t lay all the blame on school teachers. Parents must accept a lot of it themselves.
I believe the time to start teaching the importance of saving and investing is when children are in elementary school. This is when they can be taught to live within their means and to be patient and wait for things they can’t afford rather than going in debt for them. At this age, financial mistakes aren’t devastating like they can be later in life. Basic principles can be taught with as little as five dollars a week or less, and parents may even learn something in the process.
In most households preschool children notice one or both parents going off to work each day and they may occasionally ask why Mommy or Daddy has to leave. Here’s a great opportunity to start teaching them about life. Parents can explain that they have to go to work to make money so they can buy food, clothes, a home, etc. Then they can tell their children that they will soon get to go to work too. Their first job will be at school where they will learn how to get a real job like Mommy and Daddy. Make this sound exciting!
Here’s a tip! Children love to play games. Instead of the first day of school being a traumatic experience, parents can play what I call The Magic Money Game to teach them a great deal about the real game of life. Here’s how. In the weeks leading up to the first day of school, make school sound thrilling. Encourage them to look forward to it as the start of their first job, one which will let them go to work each day just like Mommy and Daddy. Instead of giving them an allowance, let them earn money by going to school. Pay them a dollar for each day they attend school. Friday’s can be pay day like it is for many workers. (I use a dollar in this example for illustrative purposes only. Use whatever amount you are comfortable with, it could be a quarter, a dollar or five dollars per day. The amount is not important; it’s the principle you will teach that will have the lasting value.)
Go to a bank and purchase a quantity of the new gold Sacagawea dollar coins. Children really like these. On Friday pay the child for their week’s “work” with five of the coins. Here’s where the learning really starts.
Get two clear containers, ones where you can see what’s inside. Mark one “Savings” and the other “Toys.” Tell your child that each week he or she must put one coin in the “Savings” container and two in the “Toys” container. As much as possible, let the children decide what to do with the other two dollars. Explain that the money in the “Savings” container will always be saved, but when enough money accumulates in the “Toys” container he or she can use it to buy a favorite toy or game that costs several dollars. Over time, they will learn the value of long term savings as they watch the coins in that container continue to grow. They will experience the excitement that comes when the savings in the “Toys” container enables them to buy a more expensive toy. And finally, they will develop the confidence that comes with having “earned” money not just for the new toy, but to spend on other little things they may want right now.
The possibilities to teach life lessons with this game are endless. This is the first in a three part series on how to use The Magic Money Game to teach children financial responsibility all the way through high school. Next week we’ll discuss how the coins could become bills, the bills could lead to bank accounts, and how to introduce children to the effects of credit. But, all of these possibilities require parental involvement and helpful oversight. Are you up to the task or will you let your children enter the workplace as financial illiterates.
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