Teaching Kids About Money
by Julie Moore
It is funny what your mother can do to you. No matter how much I said I would do differently, I, more often than I like to admit, catch myself shopping with the same mentality Mom does. For example, each time I enter the GAP I make a beeline straight for the sale racks. I am not sure that my brain registers any terms other than “ Sale,” “Clearance,” or “50% off,” and it doesn’t even stop at the GAP. You see, while I sometimes find this inherited shopping method annoying, I absolutely value the lesson I learned from Mom’s example. Your kids will feel the same way about you.
Allowance is a traditional and great way to allow your children to experience money management at an early age. Set an amount, whether it is 5 dollars a week or 100 dollars a month, and stick to it. Decide what costs the allowance will cover (toys, entertainment, clothing, etc.) and explain that you will not help out with these costs once all of the allowance is spent.
Encourage entrepreneurial spirit. Let your children set up a lemonade stand, sell their old toys at a garage sale, or start a neighborhood dog-walking business. Let them work out their own “business model” and decide how to make a profit. Congratulate their efforts and continue to inspire innovation. Who knows, you may discover the next Donald Trump in the process.
Volunteering is a very rewarding and important activity you can do with your children. By regularly scheduling time to work at a homeless shelter, soup kitchen, or thrift store, children can learn several important lessons that can be incorporated into their financial attitudes. Helping those less fortunate than your family will demonstrate the difference in needs and wants. Additionally, participating in service teaches children how to be compassionate and caring, which will resonate in their relationship with money and everything else.
Savings Accounts are a crucial part in teaching your children how to budget and save for the future. Make the opening of a saving account a very important event – take your child to the bank, and let the banker explain the process of saving to your child. Insist that your children deposit a certain amount of allowance or earnings into the account. When an account statement comes in the mail, sit down and review the month’s results with your child. If your children feel good and rewarded by saving at an early age, this is an attitude that they will likely carry into adulthood.
Let them make mistakes. Of course it will be hard for you to watch, but it is important for your children to make spending mistakes. Let your daughter blow her entire allowance on one shirt and then suffer through not having any money left to go to the movies with her friends. She will quickly learn the importance of budgeting. As you help your children recover from poor spending choices, this is also a good tip to suggest smart buying tips. The next time your daughter would like a new shirt, offer to take her to a discount clothing store so that she can afford a new look and a trip to the movies.
Show your children an example of healthy financial living. When I use the word “show,” I do not meant point out other frugal spenders in the grocery store or thrifty consumers at the mall. Demonstrate an example of how easy it is to live on a conservative budget by doing it yourself. If you respect money and refuse to let it dictate your happiness, there is a good chance your children will follow in your footsteps. Discuss your own spending habits openly. For example, explain that you would really like to have a new set of cookware, but you can wait because you know that it will be on sale after Christmas. Or, point out that vacations are very expensive and in order to afford a week at the beach, you must save a little each month.
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