Money smarts: It’s just another thing in the list of life skills we need to teach our kids.
Through the years, your child’s income and the way he or she handles money will change. As a parent, you get to model good money management by sharing your personal finance guidelines and goals. Here’s how to get kids excited about saving, spending and giving.
When our kids start wanting to buy things, it’s a good time to start an allowance. One way to do this is to pay your child for chores. There are pros to this, one being that motivated children can make more money than others. This can help prepare them for the real world.
There are also some cons. Young kids are agreeable, but as they age, the negotiating will begin. This can create constant conflict at chore time. It also involves the parents keeping good track of the pay for each chore. If you have multiple kids, then there also will be conversations about fairness. Another con is as the kids grow, they get jobs outside the house. This gives them an income that enables them to decline jobs for pay at home.
The easiest way for kids to have money is to give a monthly allowance. This means that chores are treated as an expectation of being part of the family and are completely separate from allowance. The pro to this is there is no negotiating payment for certain types of jobs and less arguing about fairness. The added bonus is that as the kids grow up and start having jobs outside the home, they are still expected to help with chores.
Money: It adds up
Kids will transition through many ways of collecting money. They might start with a piggy bank. Coin counters and sorters are always fun and educational for elementary-aged kids. They may also want to have a wallet to carry their money with them when going out.
When they get a larger chunk of change, take them to a bank to start a savings account. This will keep money safe and make it harder to spend.
If you notice that your kids always have coins laying around, have a conversation about a way to contain them. You might just need a large jar. If the container makes it easy to put money in and has easy access to take coins out, it’ll be very useful. If either putting in or taking out is hard, it defeats the purpose.
Spending: It goes fast
The greatest financial gifts you can give your child is the opportunity to control how they spend their money along with the experience of being broke.
Starting at a young age, kids will get their small amount for allowance and want to spend it right away. Most wise parents will try to warn of the impending disaster of living with no money the last 29 days of the month. We try to make it easier for them and guide them to a better decision.
But really, at this young age, it’s best for them to spend all their money the first day and be broke for the month. It might be a little painful but they will learn from this. This is much better learned now than when they are adults.
To sum this up, the key is to make money management easy for the parents. Give the kids money, give them a place to contain it and let them spend it. The less involvement and less control you engage in, the more kids will learn money management skills. Plus, it’s way easier for the parents!
This article originally appeared in the November 2019 issue of the Momaha Magazine.