Does Playing With Money Make Kids Greedy?

Kids, Games, and Money: This Holiday's Hot Combo

When my son first got into Club Penguin, I liked that the game was based on collecting and spending virtual coins. When he accumulated enough money, he'd splurge on cool outfits for his penguin and furnishings for his igloo -- and I thought he was getting a solid lesson in the law of supply and demand. Now he's moved on to games that offer in-game purchase options -- for real money -- and he's left those quaint virtual coins in the dust.

From Smurfs' Village to Farmville, games are giving kids a crash course in economics, but I want my kid's money lessons to come from me -- not a blue Smurf. I've discovered what the game companies already know: It's a slippery slope from virtual money to real.

This holiday, developers are seriously ramping up efforts to turn virtual cash into real profits. Just look Facebook's pre-paid credit card, which lets users "buy" cyber items within its games. For sale at Target, Walmart, and other retailers in increments from $10 to $50, the card is one of this holiday's hottest gift items and is projected to bring in $1.3 billion for the company.

Exclusive seasonal game items are also hot. In the wintry realm of Club Penguin, the newest and coolest virtual goods are available to paying members only. And in the world of apps, holiday merchandising is big: Companies are increasing their downloads by selling special holiday versions (like Angry Birds Seasons), linking to online stores, charging for higher levels, and hawking virtual items for real money (like X-mas Resort).

In most cases, kids will never see the actual dollars and cents that are changing hands. That may make it hard for them to understand the value of money. On the other hand, getting early economics lessons may turn them into Web-savvy consumers who begin to understand that money supplies aren't endless. Which messages they pick up on depends on which games they play -- and what lessons you help them learn.

Holiday Buying Tips

Here are a few things you can help your kids learn about being savvy online spenders -- whether they trade in virtual or real cash:

Spending is optional. Even though these games make it really unappealing to play without purchasing, explain to your kids that they can still do it.

Point out that spending is encouraged. Show your kids all the ways that they're encouraged to "buy." Kids quickly figure out that the more time they spend playing, the more money they eventually get.

Detach purchase from pleasure. Ask your children whether they feel they have more fun when they're buying and spending. Try to detach the act of purchasing from pleasure -- unless you want to set up a mechanism that you will pay and pay and pay for. Remember, kids become teens all too quickly, and the sticker shock on the buy mechanism ratchets up exponentially.

Use the virtual coins to teach the value of real money. Many games use fictional coins and economic systems as player rewards. Kids both "earn" money and search for it so that they can upgrade their characters' wardrobes, abilities, and environments. Point out that money isn't limitless without effort. While kids trade tips and tricks for getting more money on the sites, you can explain how getting a job is also an excellent source of income.

Point out greed. When a character is more motivated by the desire to "get" more than play more, there's a word for that. And you might as well teach it to your child. Greedy behavior has been known to occur in these games and has even resulted in cheating (kids download cheats from online sites to get money that they don't earn).

Talk about saving versus spending. Help kids feel good about saving up for things. Some kids just can't help themselves -- they have to spend the moment they get their hands on any kind of cash -- while others hoard and hoard. Talk about your own values when it comes to saving and spending, but do point out that in the real world, debts are tough to handle and mean you can't buy things you want because you have to pay for things you already couldn't afford.

Envy is real. Just sit with an 8-year-old who's just walked into another girl's igloo on Club Penguin that's furnished with everything she dreams of owning. Keeping up with the Joneses starts young. Talk to your kids about times when you've felt envy about someone else's home or possessions and how you coped with it. This lesson will need repeating every year in every way, but it's never too early to start.

Enable parental controls for in-game purchases. Lots of apps offer in-game purchases to kids who may not be old enough to understand that they're actually buying something. Set parental controls on your smartphone to prevent unintended costs.

Acknowledge sites that do good. Some games allow you to donate to charities as you play. Club Penguin's Coins for Change is a seasonal charitable promotion that reminds kids about the importance of giving -- and that's a lesson everyone can get behind.

What money lessons do you teach your kids?