12 Ways Kids Can Teach Us About Money

"If someone gave me $10, I would buy a toy from the movie Frozen," recently said one of my favorite 8-year-olds.

"What if the store didn't have the one you wanted?" asked his mom.

"Then I would save my money."

With their untarnished idealism and often very pragmatic ways of thinking, kids can teach us a lot about life — and about money.

1. There Is Magic in a Single Dollar Bill

From early on, we learn that it's fun to get money. Holding a dollar bill means we get to buy a dollar's worth of something. Sometimes a little treat — like candy — brings a lot of excitement. Take a kid into a bulk candy store with a dollar bill in hand, and watch the magic come alive.

At any age, no matter the dollar amount, money translates into buying power and the ability to make choices. As adults, we can reclaim that same child-like excitement when someone gives us a $10 Starbucks gift card. It's not that the $10 will make or break our wallets, but the fact that it's a gift often adds a little magic to the coffee and scone we choose to buy with that gift card.

2. What You Buy Is More Important Than Where You Buy

Do you remember how beautiful you felt when you wore your hot pink, bedazzled T-shirt to the first day of 2nd grade? Chances are, you didn't really care whether it came from a thrift shop, a discount store, or an upscale retailer. Kids generally care about what they are wearing or receiving as a gift than where it was purchased. Many adults reverse the emphasis.

3. Special Purchases Are Worth the Wait

When a child sees a commercial for a certain doll/truck/game, that's the one they want. Kids usually have to wait if a store is out of that specific item — especially if they "really, really, really" want it. After they've seen it — at a friend's house, at school or on TV — they understand that they need to wait for an adult to first approve the purchase, and later take them to a store to make the purchase. The anticipation builds, and that makes buying (and having) it that much more satisfying.

Adults can experience that same gratification as a result of anticipating a purchase, whether it's a new car or a new pair of sunglasses. Don't settle for what might be readily available; take a lesson from the kids and wait for the item that you really, really, really want.

4. Saving Is Fun!

Many parents teach their children to save money by incentivizing the process, or making it a fun challenge. Beth Kobliner, author of Get a Financial Life, says that "children as young as three years old can grasp financial concepts like saving and spending." She offers the following suggestion to help make saving fun: Have a child set a realistic savings goal to buy a specific item. "Every time your child adds money to the savings jar, help her count up how much she has, talk with her about how much she needs to reach her goal, and when she will reach it."

That same activity could be very gratifying for adults as we save up for big-ticket items or even small indulgences.

5. Money Is Finite

By pre-school, kids have an understanding that money doesn't grow on trees, but many still assume that it is somehow always available to grownups thanks to banks, ATMs, and "factories."

Still, when a child holds a $10 bill at a toy store, he knows that a $12 purchase isn't possible. As adults, with wallets full of plastic money, we sometimes forget that concept; hence the average U.S. household credit card debt stands at over $15,000. The concept of "buy now, pay later" can land many adults in perilous waters. (See What Is Your Financial Kryptonite — and How to Conquer It)

6. Make Wise Choices

What might present itself as an agonizing decision over choosing the Matchbox sports car or fire truck can turn into excitement once the decision has been made. But it might take a lot of hemming and hawing that we can't understand ("It's just a $2 toy car!").

As much as we may like them, in some ways, liberal return policies have made us lazier consumers as adults. Kids tend to stay truer to their purchases; as such, they often make more contemplative decisions. Not a bad practice!

At the same time, kids can teach us that it's okay to make a financial mistake. Kids rarely beat themselves up if they make a bad purchase. They tend to look to the next "buying opportunity" right away rather than wallow in buyer's remorse, as adults sometimes do.

The good news: As adults, capable of higher level thinking — and making higher priced mistakes — we can take steps to avoid buyer's remorse. According to Kelly Kiyeon Lee, co-author of a report in the Journal of Consumer Research, one way to avoid is to take the time to really think about the value of the product, including short-term and long-term benefits, she says. Another is to learn from past mistakes, especially high-ticket impulse purchases.

7. Big Isn't Always Better

Kids can find the joy in a "cool" passageway in a tiny house, or lighted cup holders in an economy car. Sometimes, we grown-ups forget that magic, and focus on the price tag as an indicator of what's "better," particularly when it comes to houses, cars or other big-ticket items. The problem is that reality limits our budgets, so while a $750,000 home may have more "wow" appeal, we can find the joy in the $250,000 home — or an $800/month apartment — if we open our minds to it.

8. Impulse "Wants" Are Inevitable; Impulse "Buys" Are Not

Speaking of impulse purchases, if you've ever had an "assistant" accompany you to the grocery store, you know that temptations lurk in certain aisles (think cereal, snack, cookie …) and other strategic locations throughout the store. End caps and checkout lanes can be present particularly brutal challenges. Fortunately, as the wallet-holding adult, you can moderate their impulse wants, and put the kibosh on the impulse buys. As grown-ups, we often need to remind ourselves to listen to the "adult moderator" in our brain telling us we don't really need that purse — even if it is super cute.

9. Money Can Help People

Whether it's donating a portion of their allowance to the church collection basket or contributing to a specific cause, kids learn from an early age that altruism feels good, and that if a lot of people chip in a little bit, great things can happen — towns hit by natural disasters can be rebuilt, cures for diseases can be researched, and other good causes can benefit from contributions, however small. It is their collective power that packs the punch — and can make a difference in one or many lives. And that feels good. (See also: Surprisingly Easy Ways You Can Support a Charity)

10. Free Is Fun!

Going to the ice cream shop on "free cone day" gives kids a thrill, even though, in most cases, ice cream is always "free" to them if Mom or Dad pays. Long line? No problem — the ice cream cone is free!!

When the cosmetic rep offers you a free fragrance sample, why not take one? Free gift with purchase … free samples at the warehouse store? Sure! Last week I called Under Armour customer service to inquire about a replacement strap on a gym bag. When they offered to send one to me — for free! — I felt like it was gold.

11. Money Can Be Negotiated

In fact, financial negotiations can start at a young age for many kids. "If I do more, can I earn more?" "When I turn 12, will you increase my allowance?" Even requests for a special pair of soccer shorts can be turned into negotiation, wherein kids have to make a compelling argument to the parent whose reflexive response is "no."

In a recent CNN Money article debating the pros and cons of giving kids an allowance, Jayne Pearl, author of Kids and Money: Giving Them the Savvy to Succeed Financially asserts the importance of an allowance as a teaching tool. "Negotiation skills are an important part of that [learning], which they're going to need for dealing effectively with friends, teachers and, eventually, their bosses," she says.

Those basic negotiation skills can help us get the best price on a car, house, a dining room set at an estate sale, and at other points of sale where bargaining is appropriate. They also come in handy when accepting a job offer, asking for a raise, or making joint financial decisions with our spouses.

12. Money Does Not Equal Worth

Most kids don't make a connection between success and money. Sure, most have seen enough TV to assume that a lot of famous athletes, singers, and actors are "rich" and therefore live in lavish houses and drive fancy cars. But their favorite teacher may be the lowest on the school's pay scale, and their best friend may live on the "other side of the tracks." Most kids don't notice, care, or take stock of others' net worth.

What a great reminder for us adults.

Have your children taught you any lessons about money? Please share in comments!

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