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.
The 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.
And 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.
Another 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?