What’s in Your Child’s Pig?

Obviously the value of a penny is not one cent anymore. The real value of a penny is probably less than the value of the coin it is printed on. However, pennies are collected in piggy banks all across America, right? I doubt it. Inflation has caused the Tooth Fairy to now leave $5.00 instead of a nickel. And Aunt Alice? You just don’t have the heart to tell her that your one-year-old doesn’t know how to spend fifty dollars.

You, as the parent, are the steward of your young child’s money. A good way to start saving for your child’s college expenses is to let friends and family know that you have opened an account at a bank and will gladly deposit any check they give your child. You can suggest this as an alternative to an expensive Christmas or birthday present. As your child ages, you will, at some point, need to begin to teach them about the value of money. Having a little nest egg to begin with will come in handy.

Children so often do not know the value of a dollar. They see parents spend money, but don’t realize what it takes to earn those dollars that pay for their clothes, toys, food, or other things. It is important while they are young to teach them how to spend their money wisely. Show them options when they say they want something. Give them an allowance and show them the value of saving money.

Here is an example of a simple, inexpensive, and fun game that can help your child understand the concept of managing finances. The only thing it will cost you is the price of a package of play money (bills and coins). Attach pretend price tags to things that your child regularly eats or uses. For example, a glass of milk is $.25, a pop tart is $.25, a Coke costs $.50, playing a video game costs $.75, watching television costs $1.00, and using the computer costs $1.25. In order for your child to have something he wants, he will have to "pay" for it with his own money. At the beginning of the game, give your child $25 in play money and tell him that he will have to manage his money for a week, and at the end of that week if he has $10 left, you will give him $10 in real money for him to spend as he likes. Tell him that he can earn additional play money by doing things around the house - like helping you wash dishes, taking out the trash, or folding laundry. At the end of the week, count the play money together. If there is $10 play money left, then your child has earned $10 in real cash by managing his finances well.

One of the best ways to teach your child anything is to be a role model, and managing finances is no exception. In these tough economic times, we all need to be asking ourselves, "Do I really need this?" Even grocery shopping - do you really need those name-brand chips or will the store brand be just as good and save you a dollar? Do you really need those expensive chocolates? Is it worth the convenience to buy that frozen entrée even though it’s twice or three times as expensive as buying the ingredients and making enough for five meals instead of one?

Tightening your own belt might be a tad difficult, especially if you’ve been wearing one that you can put extra rivets in to expand it! However, you and your child can explore the many ways to save money in your own pocket rather than putting it in someone else’s. Have a movie party with friends and you rent the movie, while others chip in and bring popcorn and drinks. Instead of driving to the park that is a mile down the street, dust off the bikes and ride there. Not only do you save gas, but also you get exercise and help the environment in your own little corner of the world. Have clothing trade-offs with your neighbor’s kids as they grow out of them. Trade houses with your neighbors for one night for a mini-vacation. Take out the tent and camp in the backyard. These are next-to-nothing things to do that are fun and they save money.

While it’s important to teach children the basic daily activities of life- how to hold a fork, how to tie shoelaces, how to speak correctly, how to act in public - it’s just as important, if not more, to teach them the value of money - how to earn it, save it, and spend it. Hopefully, as they get older, they will trade the piggy bank in for a wallet or checkbook, but they’ll still remember the lessons their little piggy taught them.