The topic of money has always been very taboo. You’re not supposed to tell people how much you make, and heaven forbid you ask anyone about their personal finances. There is no problem with keeping your privacy about money, but when it comes to your children, they need guidance. Guiding your children from an early age will help them succeed in life and will better prepare them to handle their finances as adults.
Allowance is a Potty Word
This may sound funny but having your child on an allowance is like teaching them to live off welfare. They are getting free money for doing nothing. Kids should have responsibilities around the house and should be expected to help within the family nucleus.
A lot of parents feel sorry for their kids. They believe in cleaning their child’s room, washing their clothes, and practically doing everything so they don’t have to do it. I completely understand where they are coming from, and although the intentions are sweet, you’re creating a monster and a parasite to society. Somehow, when kids work for their money, they feel a sense of accomplishment and they start to understand the meaning of earning their money.
Kids and teenagers need responsibilities around the house. Jobs can vary depending on their age. Choose realistic jobs that will not frustrate them, so they are not discouraged. Be clear as to what is expected of them so there is no confusion and at the end of the week, if all of their work has been completed, you may pay them their “commission.”
Motivating them with extra incentives will teach the concept that hard work does pay off. Give them random jobs outside of their expected jobs. Consider it extra credit.
Help them Visualize their Money
Kids sometimes need a visual reminder of their progress, whether it be in money, grades, or anything that shows growth.
For kids 2-4 years of age, the best way of doing this is by keeping a clear jar full of their money. Keeping this clear jar will help them see how much money they have and this will motivate them to do more things to make more money.
For kids 6-17 years of age, I highly recommend implementing the Dave Ramsey system where your kids will Save, Spend, and Donate. Children will create 3 different envelopes. Each envelope must be labeled with the words “Spend, Save, and Donate.” Every time they get paid their commission, they are expected to add money to all of their envelopes. The way they distribute their money is up to them. This teaches them that the money that comes in should not be entirely used for spending. You should always save your money for a rainy day and you must always donate because there are people less fortunate than you that need help. Repeating this every week trains their brain to look at their finances this way.
Help your child decorate their jars or envelopes. This activity will help your child get excited about handling their money!
Create Teachable Moments
There is no better way to learn than to experience things first hand. When you’re out and about with your little one, try to incorporate teachable moments. Many times we don’t realize how much we deal with money in front of our children and we are letting pass so many good opportunities to teach them.
When I go out with my daughters, I will sometimes let my oldest daughter pay for me. There are so many things that she is learning throughout this exchange. She is learning how to interact with the cashier, she is practicing her money counting skills and she is realizing that now her spending money is depleting so she has to now replenish it by working some more.
Another example is showing them your bank accounts online. Show them the money that you have and all the transactions your have made. Show them that they need to track what goes out because if they don’t, they will overdraft, and that always come with a very inconvenient fee.
Gift them a wallet or a purse they can go out with. It will make them feel a whole lot more grown up and it will motivate them to have their money on them whenever you go out.