How to Teach Kids the Value of Money in Three Steps

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“Anna, give Mike ten dollars,” I instructed my eleven-year-old student.

Anna opened her mouth wide in shock but couldn’t utter a word. She followed my instruction nonetheless and handed over a ten-dollar bill in a slow, measured motion as if it was as heavy as a block of gold. Her pained expression was so sincere and innocent that I couldn’t help bursting into laughter.

Anna was not giving up real money. The ten-dollar bill she gave Mike was nothing more than a piece of paper printed with Enchanted Collar characters and dollar signs. Yet Anna treasured that piece of paper as if it was worth as much as—if not more than—ten real dollars. Her class was playing a game I designed to teach them about business and finance.

Just four weeks earlier, Anna and her fellow students had sneered at these Enchanted Collar toy dollars. One student promptly ripped a dollar bill in half as soon as he realized it wasn’t real money and was ready to throw it into the trash can. Yet four weeks later, the students all wanted it, treasured it, argued over it, and kept it in locked boxes. So what had made the difference?

The answer lies in the hard work they had put in to earn those pieces of paper. I started their finance class with a role-playing business game. Each student applied for a “loan” of Enchanted Collar money from their fellow student “bankers.” At first, the students took the loan for granted. But as soon as the bankers declined the very first loan application for valid reasons—the business plan was poorly organized, and the applicant sounded rude—they all started to take the game and the toy money more seriously. Some students had to present for a second or third time to get their loan applications approved. On top of that, they had to maintain their good performance throughout the game; otherwise the bankers would recall their loans immediately.

When I concluded the five-week course and asked my students to return all of their toy money, the whole class erupted in a chorus of loud groans. No one wanted to part with the toy money, even though these colorfully printed papers couldn’t even buy them a pack of gum. In their hearts and minds, the Enchanted Collar toy money had taken on real, precious value.

What have I learned about teaching children the value of money? I’ve found three crucial steps in making kids understand the value of every single dollar:

1. Make them work for it. Most children know money is something nice to have as soon as they see that it can buy toys, candy, or whatever they desire. However, they won’t value money unless they’ve worked for it. Just as carelessly as they throw away toys, they can squander money if it is given rather than earned. If they can get their hands on money simply by asking you, they will think money magically grows in your wallet. If they can spend money freely with a click of a mouse, they will think there are cyber fairies called Visa, MasterCard, and AmericanExpress that can give them as much money as they want. If you don’t want to be treated as an ATM by your kids, then make them work for the money you give them.

2. Make the work fun and challenging. In my class, children had fun playing the business game and earning the Enchanted Collar toy money. Because they had fun, they now look forward to becoming business owners, doctors, bankers, etc., when they grow up. To them, working and earning money are exciting and adventurous. Their eyes sparkled with delight when they were rewarded with an Enchanted Collar dollar for completing an assignment successfully. Had I made them take a standardized test on the key elements of a business plan, they would have viewed work as boring and earning money as a chore.

3. Give both rewards and penalties. I discovered that the students who got their “loans” on their first try started to slack off in the second round of the business game. They started chatting or loitering, confident that they were set for the rest of the game. So I instituted a new rule: If their performance was rated subpar by their fellow student bankers, they had to pay back their loan plus interest ahead of the maturity date. When they realized they had to work hard not only to get the toy money but also to keep it, they began putting sincere effort into the game. They also started to treasure every Enchanted Collar dollar they earned.

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