We teach our children their ABC’s, 1, 2, 3s, about life, right and wrong, work ethic, and maybe if we’re lucky, influence them on how to be a good person. But one thing that most parents don’t teach their kids soon enough, is the value of being smart with their money.
I never really had an allowance per se as a kid, like many others did, but if I made a good argument, perhaps I might convince my mom to buy me that new toy. So, instead of learning the value of saving, I became pretty good at convincing people of stuff, but not so much good at managing my money, until I was much older. Both are good lessons, in retrospect.
Teaching your kids the value of a work ethic and money management will serve them well into adulthood. Here’s a couple tips to help you teach them about good money management.
Give your kids an allowance. That sounds pretty easy, but you can tie it to personal chores, everything from helping out around the house, taking care of pets, or even making sure their rooms are clean. The funds that are connected to those chores help them see that work equals pay, and that makes for less entitled adults.
They earned it, so allowing them to purchase what they want with it, also gives them that freedom to make choices, and mistakes, but that’s OK. They’ll learn from them too. The caveat to that is perhaps they shouldn’t buy malt liquor in a parking lot, but also the bank of mom and dad is closed outside of their allowance. Some parents use a guideline of about a dollar a week, per year of age of your child. Maybe that’s light for you, or too much for your kids. Use your own judgement.
Now that they have an allowance, allow them to perhaps earn a bit more with some “overtime”, something with extra chores or something that isn’t mandated, so they can save a bit extra for something they really want.
The allowance is great but offer some assistance with a process for saving some of those hard earned deneros. Maybe it’s a good ol’ piggy bank, or maybe open a savings account at your local credit union… Encourage the savings for that new X-Box game they want, or new toy, or piece of technology if they’re a bit older.
Leading by example is the tough one. Your attitude towards money whether you’re a saver or an impulse spender, will likely transfer to your kids. Savings accounts will help them understand how to put money away. Tucked away in an account removes the easy temptation of spending the cash, which is great for long-term goals.
Teach your kids the value of wise investing and purchasing. When you’re making monthly to major purchases, discuss it with your kids so they feel part of it, and see how things are paid for and how things are budgeted for. They see the difference between the costs vs. value on major purchases, or even on weekly and monthly purchases. If they learn the concepts of how much your family’s monthly bills are, and what it costs to run a household, when learned early, will make a huge difference for their future financial well-being.