As parents and grandparents, many of you share the desire to prepare your children to become educated, happy, and financially responsible adults. In fact, the topic of teaching children about money is one that we all should talk more about. This communication will share some tips and information about spenders and savers, want versus need, household responsibilities, and allowance.
Spenders andSavers – Develop the habit of saving for both short-term and long-term goals. Encourage compulsive savers to spend some of their earnings. Although we are usually concerned about big spenders, compulsive savers can become challenging spouses and business partners.
Want vs. Need– Parents need to encourage thoughtful spending. Frequently discuss and define wants versus needs. Implement a waiting period before a purchase can be made. Will that toy be forgotten in a few days? “Spend Your Money Day” may become a tradition in your house.
Household Responsibilities – Children can take on simple tasks and chores starting at an early age. Some responsibilities should be expected, such as personal care, picking up after themselves, homework,and doing whatever mom or dad asks without complaint. Many families create odd jobs so children can make a little money. Other chores must be completed in order to EARN an allowance. An allowance presents an opportunity to make an important connection… I must work in order to get money to buy the things I want or need. If I do not complete my job list, I do not get paid.
Allowance –Cash is king! Basics of money management must be taught with visible, countable cash. Establish an allowance system which encourages saving and thoughtful spending. Neale S. Godfrey, author of MoneyDoesn’t Grow on Trees, A Parent’s Guide to Raising Financially ResponsibleChildren suggests dividing the allowance between 4 clear jars.
- Charity– How fortunate are we! Who does your child want to help?
- QuickCash – Never again will Mom pay for concession stand or ice cream money.
- Short-TermSavings – What is on your child’s wish list? Start small then save for bigger and bigger purchases to learn how to delay gratification.
- Long-TermSavings – A child can make a meaningful contribution towards their first car purchase or college education. They will be so proud!
In the world of credit cards and online banking, educating young children on financial responsibility is more difficult and more important than ever. Create an open and ongoing dialogue about work and spending to communicate your family’s financial values and goals. You will surely find that it can be fun and empowering.