sure you set a limits on what they can
earn based on what you can afford so
your budding entrepreneur doesn’t break
4. Wants Versus Needs (ages 8-12)
Kids much younger than eight will have
trouble grasping this lesson—as do many
adults I know! But it’s important to help
your kids understand the distinction. A
need is more connected to survival. A
want is a desire that we can certainly survive without.
Distinguish common purchases. Make
a list of items that you commonly purchase, everything from bread to new
shoes. Have your child rank each on a
scale of 1 (just nice to have) to 10 (need
to have.) Discuss the rankings without
making them wrong.
Play “What’s the Worst that Could
5. Understand Impulse Buying
Happen?” Using that same list or other
items you and your child might want
to purchase, ask “What’s the worst that
could happen if we don’t get this?”
Share your own Delayed Gratification
list: Make a list of all of your personal
“wants” that you are delaying for other
priorities. Share the list with your chil-
dren, and explain your reasoning. En-
courage them to make their own list.
Again, younger children may not be able
to grasp this lesson. But it’s critical for
older kids to be aware of how Madison
Avenue is trying to manipulate them!
Critique commercials. While watching
TV with your kids, ask them what advertisers are trying to get them to do. What
is the underlying message? What are they
saying will happen if you buy or don’t
buy that product? How does the product
look in real life (i.e. that Big Mac) compared to the advertisement?
Offer “now versus later” deals. For example, offer your children $5.00 today
or $15.00 in two weeks. Which do they
want? Talk them through the decision.
And if they decide on the $5.00 today,
check back with them in two weeks and
ask how they feel about that decision.
Create a Spending Pleasure Meter. Have
your child create a visual that represents
how much pleasure they feel about various purchases. It can look like that old
carnival game with the bell on top or
like a speedometer that shows 0 to 100.
(See the Spending Pleasure Meter for an
example.) Whatever they come up with,
ask them to rate potential purchases on
this meter before they head to the store.
Ask them to re-rate that purchase a few
I hope you find these lessons and exercises useful. One last note: One of the
most important things in teaching your
children about money is to allow them
to make mistakes, and let them experience the consequences of those mistakes!
You’ll find that there is no need to scold
or lecture them. If Jimmy blows his allowance on candy so he can’t go to the
movies with friends, great! It’s a lesson
that will definitely stick. Better to have
your children get these tough lessons
while they’re still under your care.
Pamela Yellen is a financial security expert
and author of two New York Times best-selling books, including her latest, The Bank
On Yourself Revolution. Readers can boost
their financial literacy and discover their Financial IQ by taking Pamela’s eye-opening
Financial IQ Quiz here: www.BankOn Your
One of the most
important things in
teaching your children
about money is to allow
them to make mistakes,
and let them experience
the consequences of