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More Thoughts On Teaching Financial Responsibility

Our reliance on representations of money rather than “cold, hard cash” and “green backs” makes understanding money more difficult. When a child has coins and currency, she has something tangible, a concrete way of experiencing money. She can count and explore how different coins combine to equal specific values. A quarter is worth 25 pennies, five nickels or two dimes and one nickel. Other combinations are also possible, and whatever coins she puts together to equal a quarter, the value remains constant. Twenty-five cents is 25 cents.

Exploring different coins and combinations that equal one dollar further enhances her understanding of money and mathematics. Handling physical coins and currency allows a child to explore the impact of her decisions. Say the child has five dollars and is ruminating on what she wants to do with the money. Saving is one choice, spending another, choosing to save some and spend some is yet another.

Counting out what the child will be spending to purchase what she wants leads to making more thoughtful choices. Weighing immediate gratification against a later one helps children hone their understanding of the connections between spending and saving, now and later. Learning to distinguish wants from needs and how to save and spend wisely are key to learning financial responsibility. For children – and adults who relate to the old lament “how can I be overdrawn? I still have checks” – the concrete trumps the abstract. Ultimately, the concrete becomes abstract for most of us, and we embrace the conveniences of contemporary banking. The key to that transition is knowing – truly knowing – that behind every financial decision we make are “real” coins and currency.

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