When I go to a store with my four year old son he wants to buy a lot of stuff he sees. Also he constantly claims that he needs a new toy. How do I explain to him that we can't buy everything we want?
I suggest a simple habit. Never buy toys on impulse; no matter how difficult the merchandizers make it for us. (Toys in the check out lane, really?)
Each time explain that the child can think about getting the toy and give reasons on the following day. Let them know that if you approve of the reasons, on the next trip to the store you will get the toy if they remind you.
All of the above hinging on their ability to hold the desire for the toy over time.
Remember to demonstrate this in your own behavior.
This is primarily for combating impulse buys. Budgeting and scarcity will necessarily be handled differently. But if you are not truly in a financial bind, avoid making your child feel an imagined/false financial insecurity. They don't need that added stress.
Time to buy a money box/'piggy bank'
We bought our son a Thomas the Tank Engine money box and we often randomly give him the small change from local shopping trips. He enjoys putting the coins into his money box and pretending to count the money occassionally.
Now, when we go shopping and he latches onto something he likes the look of, we simply ask "okay, you can buy it if you want. Did you bring your money?". Of course, he didn't, so he then realises he cannot buy it.
This only works if we stand firm on this position - if you 'loan' them the money even just once, you're back to where you started.
I'm facing the same problem and there's a hidden problem here that lurks hidden in the dark: Constant want and depression. A child that will get everything he/she wants will become a depressed child. I see it with mine. I don't know any other 8 year old who has the following (for the asking): XBOX 360 with Kinect, newest iPod Touch, iPad, his own computer with internet connection, Nintendo 3DS and toys beyond his capacity to enjoy. Do you think he's happy? no. He wants new things all the time - has no appreciation for what he has. Every trip outside the house must result in a "toy" or purchase. It's no even things he wants - if he can't find things he wants on the shelves, he'll pick something he doesn't want just for the "rat-rush" of the buy and he'll lose interest within minutes and become depressed again.
I realize it's our fault for pampering him, but if there's anything we learned from this - buying a kid whatever he wants whenever he wants it - is child abuse. It's harmful, it will depress him/her and seriously hurt the child.
Avoid it at all costs. Buy him something for his birthday he'll appreciate. Never make it a weekly/bi-weekly ritual.
Our twins just turned 5. Here are some things that worked for us. Pardon the long list, our twins have very different temperaments and we've found that very different things work for each of them: One responds better to talking, and the other needs consequences before the talking sinks in. I'm also giving our tactics for dealing with the rudeness that I find most aggravating about kids who frequently want things in public. I don't know if you have this problem, but they've always gone hand-in-hand for us.
We talk about how Mommy leaves for work each day (Dad is a SAHD) to work and earn money, and how Mommy has to spend more time working if we spend more money. This isn't just one conversation, it's something we discuss when the kids ask things like "Why does Mommy leave the house each day?" and "Why can't we afford that?" This helps the kids see that buying more is a lifestyle choice, and that our family values time together over getting more stuff.
Sometimes, we give the children most of the "fruits and veggies" portion of our grocery budget and let them pick out their own produce, up to the budgeted amount (usually $5 each). They get a feel for how money works, and they love eating the (healthy!) food they picked out.
After thanking God for giving us food at meals, we thank Daddy for preparing the food (I lead this), and my husband has started leading the kids in thanking me for earning the money to buy the food (and sometimes he and the kids start listing out other things we buy with my income - water, electricity, our house, etc.). This helps our children connect money with work and with the things we truly need, like food and shelter.
We play the "gratitude game", where people list things they are grateful for - toys, family, nature, our home, etc. The kids get pretty into thinking up detailed things they appreciate. This lets us discuss gratitude for what we already have in our responses to why we aren't buying more. Gratitude is a very abstract concept, but teaching it by giving examples of things we are grateful for has worked well.
When we are asked rudely in the store to buy something, I talk about how I am sorry, but she asked rudely and I don't buy toys for rude children or selfish children. Then I focus on the manners, explaining what a polite way to deal with the situation would be. I then refuse to buy the toy even if she asks politely because she started with rudeness, and sadly explain that she has to be polite from the beginning. A bad reaction to this information (throwing a fit, for example; or, continuing to be rude) leads to more severe discipline.
Nagging, repetitive questions (or statements!) that we've already responded to are a form of rudeness, and disciplined accordingly. The word, "Why?" is not considered a complete question, and we coach our daughters on asking the full question before we answer, e.g., "Why can't we buy that toy?" "Why does it cost too much?" "Why can't we afford it?" "Why was I [the child] too rude?"
We keep a "To Buy" list of things we want, and when our kids want something and ask politely (on the FIRST try!), we tell them we'll put it on the list and think about it. Sometimes they get these items for holidays or when they've been especially well behaved. Very rarely, they will receive a politely requested item that we can afford immediately, or they will be so well behaved when we say "No" that we will change our minds and get it for them then, saying that we are celebrating our joy at having such a polite child(ren).
Here are some things we do with our 4 year old:
If we are shopping with my son and he is going to get something we ask him to take the item and the money to the teller / cashier himself. In this way he can see how the transaction involves money being spent and it doesn't come back.
The same as Ethel mentions in her answer, we explain that money is earned through his parents going to work. We also explain that we are given a limited amount of money for our work.
Whenever we need to pay for something expensive we also mention to our son that what we are paying for is expensive e.g. if we need to pay our electricity online. We do this without trying to be negative, it's not to make him feel guilt, but to get an understanding that some things require more money than others.
I also explain to him when we are shopping that we can't waste money by buying lots of special things at once (we can't have a shopping trolley full of chocolate and ice cream) because money is valuable and can't be squandered.
Children can understand complex ideas by piecing together little pieces of information. So it's not about trying to explain hundreds of details, but planting lots of little ideas.
The desire of the human flesh is what we all need to learn to overcome. Your child doesn't understand math and doesn't understand where the money comes from either. So he's not going to understand the value that money represents.
The value that your child needs to understand, is the value of patience. You can start teaching them this at home. Here's what you do.
Before dinner, yes.. before dinner, offer your child a cookie. But tell them, that if they wait until after dinner, then they can have two cookies.
Of course they're going to want the cookie now. You have to do everything you can to convince them to wait until after dinner. But don't force them. If they want the cookie now, and it becomes a heated debate, then give him the cookie.
Keep doing this at dinner time until you can convince your son to wait until after dinner. Once your child realizes that they can get two cookies if they wait, then mix it up a little and offer them other kinds of treats in the same manor.
Of course as your child gets older you can come up with all kinds of new ways of doing this. What you're going to notice is that when you're at the store your child will be much more patient with you when you tell them that you cannot buy them something right now. And when you do finally buy something for them, remind them that because they waited they can pick out a toy.
What we did successfully with my kids from 4 (from 3 with the youngest) was to let them know that they could spend their weekly allowance (at that age 20 pence) and earned pocket money on something 20p or less, or save it to get something bigger that they want.
Our youngest is now 5 and she is perfectly capable of saving her 50p a week for a few months to get something more expensive, and the eldest, now 10 has managed to save £60 to hire quad bikes, segways and karts for a weekend sporting event.
They earn more for chores, such as helping me clean the car or tidying their rooms - and they have learned the value of money. If they want something bigger they can carry out more chores, trade with their siblings or save for longer. A valuable life lesson!