Teach Your Kids About Money

child

Many of you have specific goals you are meeting for 2009. Several of you have shared these with me. One reader is spending $60/week on groceries for her family of five. Another is saving for a down payment on a house. Another is working to make extra house payments this year. Many of you are working really hard to spend or save your money wisely. But are you passing that on to your kids?

A Lasting Lesson
My parents modeled good financial practices. One thing my father taught me is that you shouldn’t spend money you don’t have. As aggravating as it was as a teenager when I couldn’t have a fancy car or expensive jeans, I am grateful for the lesson now. I never put anything on my credit card that I couldn’t pay for right now and I am careful with my money.

abc_blocksThe ABCs of Money
Kids need to know how money works. You can start when they are young by helping them differentiate between needs and wants. They need new shoes. They want the ones with the transformer on them. You can also show them what money looks like and how to count it. I cheated my little brother out of lots of money because he counted everything, “One money, two money…” and I knew the difference between pennies and quarters! Don’t worry, my mom made me give it all back.

You can explain that money comes from working and that everybody has a job. Once they get a little older, you can assign them chores and give them an allowance if they complete all their chores for the week. Then they will learn that if they do their job, they make money. But if they don’t, their allowance will be docked and they won’t receive the full amount. Just like if one of us doesn’t show up for work. Budgeting is also a useful tool that you teach kids of any age.

shopaholicAnd when they are even older, you can talk with them about credit cards, checking accounts, bank interest and other things. This reminds me a little of the Shopaholic movie that comes out in a few weeks. She thought everyone had these magic cards that got them whatever they wanted. No one explained to her how they really worked until she was 20k in debt! You may think that is a fictional circumstance but there really are people out there with that kind of credit card debt. And part of the reason could be that their parents never explained the concept or the consequences to them.

Sharing With Others
You can also help your children develop a sense of social responsibility. One way is to model charity. Many families give money to their church or other religious organization. Some families give money to a community service organization or charity. You can let your children add a portion of their allowance to the family donation so they feel they have contributed too.

charityAnother valuable lesson is to teach your children that even in lean times, they can still share with others. They can donate their time instead of donating money. They can also donate their things. There are countless organizations that ask for gently used clothes and toys. You can further involve your children in the process by letting them pick the organization your family supports. You can narrow the list down to two or three and tell them about each one and let them pick. Then they feel involved.

Teaching your children from a young age about how to manage their money can help them grow up to be more responsible and knowledgeable. Plus, by teaching them to be savy spenders and savers, you might just get them off your payroll sooner!

Do you have any tips that have worked well in your family?

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4 responses to “Teach Your Kids About Money

  1. My daughter is only 6 months old so we’re not at this point yet. Something I want to make sure she understands is that is okay to spend money too. Not frivolously but on things she needs. I always understood that my parents worked very hard and therefore I was a good steward of the money they would give me. I didn’t really have an allowance (even though I had chores around the house) but they would give me lunch money or money to go see a movie with friends. However, since I knew my parents worked very hard for their money I was never comfortable spending it. That filtered over to my own money that I earned from summer jobs. I always felt guilty if I spent more than $20 on an article of clothing. I still struggle with this even as a 30 year old to some degree but I am getting better. I want to make sure that my daughter understands that is okay to spend a little more to buy quality as opposed to the cheapest that will fall apart within a few months.

    Another thing I want to mention is that my parents did model good fiscal responsibility in terms of living with little to no debt and giving generously. I’m thankful they shared with me openly about their giving and I intend to do that same with my daughter. I want her to be present when my husband and I talk about supporting this missionary or that charity or increasing our tithe.

    • Good comment Jan! You mentioned some excellent points that create a great lead-in to next Thursday’s Money Matters post: Frugal vs. Cheap. Stay tuned for that one!

  2. My daughter has a little friend (Sofia) who comes from a very priveledged background. The family is very wealthy and have everything.

    They do a really cool thing for Sofia’s birthday every year. Instead of having all the children bring her a gift, things she likely already has, the parents sit down with her and together they select a charity.

    Then on the invitations, it always says, “In lieu of a gift, please bring XXX” The year of Hurricane Katrina she collected money for the Red Cross. The next year it was to fund for a family at their church who had 2 children diagnosed with cancer. Last year, we brought canned goods for the food bank for all the Hurricane Ike refugees.

    When she gives the donation it is always in the name Sofia and Friends. I think it is so refreshing to see someone with so much giving in such a creative way. It has also been a great opportunity for me to talk with my daughter about giving to others.

    I also think that you don’t have to be wealthy to do something like this. Just an idea I thought I’d pass on.

  3. Wow Susan! That is a really cool idea. Thanks for sharing. I’m going to have to remember that one.

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