Teaching
Your Kids About Money
You might be thinking, "Isn't there enough to do as parents without training
my kids on money management?" We all know parenting isn't easy, but let's
face it, kids need help to develop good money discipline. Although many
schools teach basics such as how to write a check and keeping a check
book record, it just isn't enough in today's complicated world. We don't
know of a better way to pick up some proven pointers than from a family
that has been putting them into practice. Scott and Jenny's children are
now in high school and college. They shared with us a few ideas on what
has worked for them through the years.
- "Make an allowance meaningful," was the
first tip from Jenny. This means it needs to be large enough that
your child can buy something without hoarding for weeks. For grade
school children it might be $5 a week, middle school might be in the
$10 - $15 range, and high school $20 - $25. Scott chimed in his belief
that children should connect actual household chores with their allowance.
He felt it helped them understand the future concept of work and compensation.
- "Encouraging saving" was next on their
list of suggestions. Although they didn't force their children to
save, Jenny and Scott talked frequently about the value of saving
and setting larger purchase goals like a Play Station game or as they
became teenagers, their first car. They helped their children set
specific savings' goals each year and talked through how they were
going to achieve the goal...by saving a percentage of their allowance,
or when they started earning money a specific amount each payday.
- "Use real life examples to teach them."
Scott remembers, with a laugh, how he took several credit card offers
received in the mail and used them to explain things like annual fees
and interest rates. According to Jenny, "the most valuable part of
that discussion was teaching the kids that you have to pay back what
your charge. They had the idea it was free money."
- "Including them on important family money decisions
is another way to teach them about tradeoffs and value," stated Jenny.
Examples the two parents cited were including the children in buying
their family computer, deciding what charities to support, and discussing
how the family was going to pay for college bills.
- "Have them share in purchasing their first
car." Scott and Jenny decided that each of their children would
have a car when they turned 16, but it would be a joint purchase.
"We didn't want to just give it to them, or make it entirely their
responsibility. Our deal is to provide a matching amount to what each
child could save and afford to buy," Scott explained. "It was pretty
amazing to watch the kids calculate what they could afford and begin
to understand that the more aggressively they saved the more Mom and
Dad would be chipping into the pot."
