How To Teach Kids About Money: Part 1
When it comes to money and children, here are common concerns.
• How can you teach your children to handle money responsibly?
• What are the strategies that help adolescents to value the effort behind money?
• Do you pay kids for doing their chores?
• Should you threaten to take away allowances if they are acting poorly?
While perhaps one formula does not meet all needs, the strategies I have outlined below will help guide your children to a responsible attitude toward money.
1.) Responsible Understanding of Money Is Not An Accident. It Must Be Taught.
Too often, we hope that our children will get the message. We talk and talk about money and how important it is to value what we give them, but this is often quite useless. Instead, we need a strategy. We must approach these lessons seriously.
2.) Don’t Purchase Behavior With Money.
Using allowances as a tool to “purchase behavior,” will end up with you TRYING to purchase their compliance and cooperation with fundamental chores and household responsibilities. Bad plan. I do not recommend that you pay children for completing basic tasks around the house. If you pay or give an allowance for basic chores done in the house, you will only be buying the appearance of responsible behavior. Manage daily chores with a better parenting plan, not with money! This is the key to getting on the right path.
3.) Commit To A Regular Allowance Instead Of Giving Out Money When Asked.
Give the kids an allowance that does not depend on their behavior or chores. They should know that they get an allowance because you love them and you want them to learn to take care of their own money.
Let them know that it’s their money to manage each week, and watch them learn from their choices. Begin early on, to allow children to experience the consequence of good judgment, as well as poor judgment in their use of their money.
Come up with a reasonable amount of spending money for your children, and include monies for treats that you might typically buy them. For example, if you normally buy the kids some juice when you are getting gas, include that portion in their allowance. As they get older, include their lunch money in their allowance.
With age and maturity, include some extra spending money, for the small “stuff” they often want and that you pick up for them. Then, when you go to the movies, for example, you have already explained that they need to buy their popcorn (if they want it) because it was included in their allowance.
The key here is to incrementally add to the allowance, as your children age and become more capable of managing the money. Let them experience wasting it all, and then having to go without the extra treats for a few days. This is valuable learning early on.