How to Teach Kids the Value of a Dollar?

February 19, 2015

Teaching my kids the value of a dollar is something that’s important to me and I’m always trying to find ways to help them understand that process of earning & spending money isn’t as simple as swiping your credit card.

There aren’t as many teaching moments as there were in my childhood because money is less visible in our society now. Credit cards, direct deposit, and auto bill pay mean that I hardly ever have actual cash in my wallet and my kids don’t have as much exposure to money coming in and going out of the household.

Teaching through Stories
Money Lessons Little House on the Praries
I was really pleased when I unexpectedly ran across a discussion on the value of money in a book my son is reading. He’s really gotten sucked into the stories of pioneers as told in the “Little House on the Prarie” books. The rigors and dangers of life as a pioneer in the 1800s are enough to keep him interested and excited to read more each night before bed.

Reading about how the Wilder family got by with so few worldly possessions and how hard they worked just to put food on the table and a roof over their heads teaches a little about the value of hard work and money. But last night we ran across a section in the “Farmer Boy” volume of the series where a young boy named Almanzo asked his dad for a nickel to buy some lemonade at the town Fourth of July celebration.

I liked his answer and also that my son read it in a book. Sometimes advice from mom and dad goes in one ear and out the other. But when they read it in a book or hear it in a story sometimes it soaks in a little more. So here’s the mini-tale of how this boy’s dad helped him understand the value of a money.

Money for Lemonade

To set it up, they’re at a July Fourth celebration in the town square and the young Almanzo is jealous because all his friends and cousins are buying lemonade. He approaches his dad who’s in conversation with the men of the town and asks his Father if he can have a nickel:

Father looked at him a long time. Then he took out his wallet and opened it, and slowly he took out a round, big silver half-dollar. He asked:

“Almanzo, do you know what this is?”

“Half a dollar,” Almanzo answered.

“Yes. But do you know what half a dollar is?”

Almanzo didn’t know it was anything but half a dollar.

“It’s work, son,” Father said. “That’s what money is; it’s hard work.”

So I can imagine at this point the boy probably has a confused look in his eyes. He looks up to his dad so he believes what he says but he doesn’t understand what it means. So then his Father goes on and relates it to something more specific that the boy can relate to.

Father asked: “You know how to raise potatoes, Almanzo?”

“Yes,” Almanzo said.

“Say you have a seed potato in the spring, what do you do with it?”

“You cut it up,” Almanzo said.

“Go on, son.”
“Then you harrow ? first you manure the field, and plow it. Then you harrow, and mark the ground. And plant the potatoes, and plow them.”

“That’s right, son. And then?”

“Then you dig them and put them down cellar.”

“Yes. Then you pick them over all winter; you throw out all the little ones and the rotten ones. Come spring, you sell them. And if you get a good price son, how much do you get to show for all that work?”

So up until now Almanzo’s been talking about something he knows well, helping grow potatoes. Earlier in the book it talks about all the steps that he and his brother go through to help with potatoes. So this is something he does every year and not necessarily something he enjoys. Now his dad relates all that hard work to money.

“How much do you get for half a bushel of potatoes?”

“Half a dollar,” Almanzo said.

“Yes,” said Father. “That’s what’s in this half-dollar, Almanzo. The work that raised half a bushel of potatoes is in it.”

Almanzo looked at the round piece of money that Father held up. It looked small,compared with all that work.

That part of the story is neat because the dad helps him tie the value of the money to all the work that the boy does to help grow potatoes. But the next part is even cooler because the dad puts his son’s newly gained understanding of the value of money to the test.

I don’t know if my kids would act as responsibly as young Almanzo does in this next section but I’d like to think they’d at least consider it. So continuing on:

“You can have it, Almanzo,” Father said. Almanzo could hardly believe his ears. Father gave him the heavy half-dollar.

“It’s yours,” said Father. “You could buy a pig with it, if you want to. You could raise it, and it would raise a litter of pigs, worth four, five dollars apiece. Or you can trade that half dollar for lemonade, and drink it up. You do as you want, it’s your money.”

What I really love about this part of the story is that his dad doesn’t use a typical generic statement that us parents often fall back on, like “don’t waste money”. Instead he shows his son an alternative to spending his money on lemonade. It’s also neat because he’s planting entrepreneurial seeds, showing his son how to turn some money into more money.

Almanzo forgot to say thank you. He held the half-dollar a minute, then he put his hand in his pocket and went back to the boys by the lemonade-stand.

Frank asked Almanzo:

“Where’s the nickel?”

“He didn’t give me a nickel,” said Almanzo, and Frank yelled: “Yah, Yah! I told you he wouldn’t. I told you so!”

“He gave me half a dollar,” said Almanzo.

The boys wouldn’t believe it till he showed them. Then they crowded around, waiting for him to spend it. He showed it to them all, and put it back in his pocket.

“I’m going to look around,” he said, “and buy me a good little pig.”

So after the dad’s mini life lesson is over, he lets his son make the decision on his own. So how could this lesson be updated for the current day?

So if my son asked me for a dollar to buy a lemonade at the fair I suppose I could offer to give him $20 to use to setup his own lemonade stand. If I gave him that much money would he listen to my advice and use it to invest in his own business or would he just spend it on lemondade and candy? I don’t know but I guess there’s only one way to find out.

How about you, what teachable moments have you encountered with your kids? What have you done to help them understand the value of a dollar?


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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One Response to How to Teach Kids the Value of a Dollar?

  • Tracie Shroyer

    What a great story! I think the best part is that Pa knew there was an equal chance Almanzo would actually buy the lemonade and waste the money but he was willing to take that chance and give A a choice. So many parents are afraid to let their kids learn hard lessons with money by giving them the money to choose.