Cold Hard Cash- Lesson 1

To understand money, children must handle money. I don't mean the little brown and gray, plastic discs used in elementary math classrooms. I guarantee that the gas company is not impressed when you try to pay your bill with mimeographed sheets containing drawings of one dollar and five dollar bills. Children must handle money and I mean cold hard cash.

Money is a concrete example of mathematics in action. It encompasses the metric system, addition, subtraction, decimals, fractions, percents, counting, multiplication, division, story problems, interest, exponential growth, negative numbers, accounting systems and regrouping (to name a few.) It is a common joke that a math professor at the local university can perform complicated computations and prove complex theorems but cannot balance his own checkbook. This is absurd. We teach our children mathematics so that their lives may be enriched. We want them to be successful adults. Learning how mathematics connects with daily life is crucial to this goal.

Teachers who teach at inner city schools tell me that their students do well with money. This may be attributed to the fact that a large percentage of their parents cash their paychecks and then purchase household goods with the cash. Many of them do not have checking accounts. Few have credit cards. Seeing cash and using it for purchases gives money a tangibility that desk work cannot.

Teaching money is best done by parents at home. Good teachers might use worksheets with story problems about money. They might have students work in centers counting money. Some teachers may drill students on coin names and values. Teachers may even attempt to mimic real life by creating classroom stores or by using reward systems that include a classroom monetary currency. However, despite their best efforts, teachers do not prepare students to deal with a real life economic system. Parents must take this responsibility. To supplement the traditional teaching methods of most public schools, parents can use a variety of techniques to aid their children in learning about money.

I recommend that every child over age 2 be given an allowance. The dollar amount of the allowance is unimportant. The child must receive this money frequently and must be paid in cash. IOU's, deposits to a savings account or payments made with "fake" money defeat the purpose of this exercise and MUST BE AVOIDED! Many Americans have deeply rooted issues with money and find it hard to simply give their children money. An allowance is NOT earned through doing household jobs. That would be a wage. An allowance is NOT earned through good behavior. That would be a reward. An allowance is simply an allotted amount of money GIVEN to the child. Having children earn their own money is not a bad idea. However, it rarely provides children with enough opportunities to practice using money. If your own financial situation severely limits the amount of money you can give your child, try this technique.

Many parents claim that they cannot afford to give an allowance and yet they purchase items for their children such as shampoo, clothing, lunch tickets, toothbrushes or pencils. Explain to your child that the purpose of this allowance is to teach them about money. Instead of purchasing all of your child's household needs, allow them to have money equal to what you would have spent on toothpaste, notebooks, crayons, etc. Follow the steps below every time you give money to your child. Some steps can be adapted or expanded to fit the age of the child.

AT HOME:

• Help them to write a budget and a shopping list so that they can see where the money must be spent.
• As you give the money to the child, have them count it out loud (with your help, if necessary.)
• Have your child sort the money they receive by type of coin.
• Help them arrange money into piles equivalent to a one dollar bill. Show them that money can be combined in many ways.
• Remind the child that money is important and must be kept safe. Brainstorm appropriate ways to store and carry money.

AT THE STORE:

• Take your child to the store. Older children may carry small amounts of money at the store. Parents should watch carefully since children will set their money on the ground when distracted by an item at the store. (Even many adults leave their purses sitting unattended in shopping carts while they browse the merchandise.)
• Help children locate the price tags of the items they need to purchase. Let them read the numbers. Show them how to compare prices.
• If you have a pocket calculator- bring it. A child can total up the cost of their items as they shop so that there will be no surprises at checkout. A child will begin to see that we make choices at the store based both on what we want to purchase and on the price of the item.
• Point out each step the checker takes in figuring the prices. A self checkout lane can be fun for children to practice locating the barcode and scanning it themselves. Show your child how to double check the price of the item on the screen.
• The checkout provides a wonderful opportunity to talk about sales tax. Sales tax is a percentage and older children can figure the tax before the checker gives them the total.
• Let your child count out the cash as they pay the cashier. This may take a little extra time. Don't shortcut the process simply because someone behind you is in a hurry. You are teaching your child an important life skill.
• Discuss what happens if you cannot give the cashier the exact amount and must receive change.
• Remind your child to take their receipt. Explain to your child how to read a sales receipt. Discuss which receipts must be saved and which may be thrown away.

These techniques take extra time but can quickly become routine for you and your child. Remember that you are teaching your child an important life skill. It is better that your child should make small mistakes when you can help them than for them to make bigger financial errors when they are on their own and have no safety net.