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How to teach kids the value of a dollar

In an age of plastic cash, it’s difficult to show our kids the value of the dollar.

At the supermarket, retail stores and even online, our children watch us pay for just about everything with a credit card or mobile wallet.

So how do we teach the value of being cash-conscious?

“Parents need to remember to teach them while they’re young and at home,” says Laura Donner, a member service representative at Dupaco’s Asbury, Iowa, branch.

Donner, a mother of three, says it comes down to getting children involved with their money—and yours.

Be open about your finances.

When you pay with a credit card, talk about how you’re responsible for paying for those purchases when your credit card statement arrives.

Show them what your checking account looks like—how your paychecks go into the account and how you use those funds to build your savings and pay your bills through online banking or your checkbook.

As they get older, explain how interest works. If you have a credit card statement that wasn’t paid in full, show them how you were charged interest the following month.

“Some people are scared to start that conversation,” Donner says. “But you need to be honest with your kids if you really want them to understand the value of the dollar and how finances can affect them in the future.”

Establish an allowance.

Give your children an opportunity to earn an allowance by completing chores. They’ll learn that hard work pays off.

When children practice saving, spending and giving with their money, the lessons tend to be more meaningful.

“Once in a great while, you can buy them a $5 or $10 toy, but it’s better for them to earn their money and decide whether they want to spend it,” Donner says. “When you take them shopping with their money, they’re suddenly reluctant to spend it.”

And that’s the whole point. An allowance can help kids become better savers.

Talk about needs versus wants.

Of course, kids will still want to spend some of their money. And that’s OK. But guide them with those decisions.

Help them determine how much to spend and how much to save. While shopping, help them identify whether items are needs or wants.

When her children find something they want, Donner often responds with this: “Is this something you’re going to want to keep for a long time?” That can help discourage impulse buys.

“A lot of times, we let them look and pick out a couple of things. Then we go back at a different time to get it if they still want it,” Donner says. “They need to learn that you can’t always buy what you want. You have to think things through.”

Related: For more tips and tools to help you along the way, visit Dupaco’s Parenting section

Open a savings account.

When kids have their own savings account, they can watch their money grow. If you want to keep some control over their assets, start with a custodial UTMA account (Uniform Transfer to Minors Act).

Regularly talk to them about their balance and savings goals.

Dupaco’s youngest members are rewarded for saving through the DoPack Saver’s Club incentive program.

DoPack members receive a sticker on their Saver Card each time they make a deposit of $5 or more. They can choose a prize after they make their third, sixth and 10th deposits.

“It’s a great experience for them, and they start to understand the value of saving at a young age,” Donner says.

When children reach middle school, it’s a good time to consider also opening their own checking and regular savings accounts. It allows them to continue working toward financial independence—with the safety of mom or dad nearby.

Teach them how to balance their account—and the importance of doing so—every time they swipe their debit card. “

“If parents don’t teach kids how it works, how are they really ever going to learn?” Donner says.

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