Teaching Your Kids About Money
January 05, 2007
Contributing Writer: Stephanie Foster
Children
aren’t born with an understanding of how money works; all
parents learn that one quickly. A young child sees the things they
want or need just appear from Mommy and Daddy. The fact that Mommy or
Daddy gave money to the sales clerk means nothing to them. So how do
you teach your kids about money?
You have to consider your
child’s age first. My daughter, for example, is three, going on
four. Right now she knows the names of the various coins, but the
difference in value between a dollar and a quarter, for example, is
completely unclear to her.
To help her learn, we are letting
her spend just a little bit of money. We gave her a $3 budget to buy
her baby brother a birthday present a couple months ago. She
struggled quite a bit finding presents in her price range and had to
settle for something other than what she had wanted to buy for him.
Specifically, she wanted to buy a farm for him, but most of those we
saw were in the $20 price range. She finally found a variety of small
gifts that fit her budget. She was so delighted to be able to give
the cashier the money we had given to her.
Now, obviously
this taught her very little about the value of money. She didn’t
have to earn it, and she really didn’t understand why some
things cost too much. But it was a very early lesson in sticking to a
budget.
You need to decide when you give your children money
and why. Some parents prefer to give a regular allowance with no
association with getting chores done, etc. Others have a set rate
given provided chores are done, while still others have a set rate
per chore completed. There’s no right or wrong way, but you do
need to be clear on when your kids get money. Don’t forget to
consider ways in which your kids may earn extra money.
Also
consider making rules on how allowance may be spent. Many families
have their kids put their allowance in multiple containers - one for
immediate use, one short term savings, one long term savings, one for
charity, or any combination of containers. Saving money is a habit
many parents have trouble keeping, but it is a great one to teach
your children.
By the same token, try to avoid teaching your
kids to rely too much on credit. Some parents will let their kids
borrow money against their next allowance. Now, managing credit well
is a vital skill, but it is one best saved for after kids have
managed to learn how to save money well, in my opinion. On special
family trips it may be appropriate to loan your child some money, but
if it something that can easily be bought later it is far better that
they learn the value of saving toward a goal.
But there are
more ways to teach your kids about money than giving them an
allowance. Talk to them about what things cost when you go to the
grocery store. Go over what each item costs, and if buying by weight,
explain how buying more means you pay more, and that you only want to
buy what will actually be used. This is also a good time to teach
them about quality, and how to look for the best produce. Children
are very proud when they find food that is worth buying and may have
a good eye for things once they have been taught what to look out
for.
Don’t forget to teach them about coupons! Once
your child is old enough to not throw them around, he or she may be
good at keeping track of your coupons and making sure you remember to
use them.
As your kids get older you should help them to
build a more realistic picture of what things cost. Have them write
the checks out for your bills - or, if you have automatic payments as
many people do nowadays, go over your statements from your various
bills so that they can see how much everything is really costing you.
Managing money well is a vital life skill and one that
children can begin to learn at a very young age. You don’t have
to have your finances in good order before setting a good example for
your child. In fact, teaching good money habits to your child might
just help you to take a look at how you are spending your money and
help you to improve your habits. This is one habit that your kids
will be grateful to have later!
=====================
About
the Author: Stephanie Foster works at home and has to live
on a budget, teaching her kids to do the same. You can learn more
parenting tactics at
http://www.homewiththekids.com/family/.
=====================
Source:
www.isnare.com
=====================
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