We take it for granted that children know how money gets
into our wallets. The tips below will guide you through teaching
your children the value of money. Now I'm not referring to the
value of stocks and bonds, compounding interest, or the current
market value of a U.S. dollar.
What every child should be taught at some time is: the purpose
of jobs (how we earn money), saving for goals (how to save money),
limit useless spending (how to budget).
It's up to you to decide when and at what age it is appropriate to
discuss the following topics. But keep in mind that if you don't
teach them the skills to make educated, responsible decisions
with their money, you will be holding back a valuable lesson that
should be taught. Learning how to successfully manage money
is a skill they will have for life.
Learning comes from experience. Just talking about money will
not get the job done. Learning how to earn, save and spend money
appropriately comes from real life experiences.
If your children do not have an allowance already, think about
starting one. Only when they have their own money to manage,
can they put your lessons into practice.
When you are discussing allowance with your children, relate it
to your own life. Explain to them that when you want to buy
something, you must first work to earn money, then save enough
money in order to purchase it ie: car, house, clothes. Tell them
that if you don't go to work and earn money, there's no way you
can afford to buy what you want.
You can then explain to your children that if they want to buy a
new toy, they must earn the money in order to buy it.
One method that's effective is designating 'X' number of chores,
for 'X' number of dollars per week.
For example: "Johnny, you will earn $5 a week if you do these
jobs/chores: water the lawn (twice), take out the garbage, vacuum
the house (twice), and feed the cat everyday."
It's up to you to develop a list of chores that can be done around
the house, and an appropriate allowance amount to go with it. In
other words, you shouldn't have your child painting the whole house
for a quarter.
You should also be sure and make the jobs/chores age appropriate.
A twelve year old will be able to do more than a seven year old, so
take this into account when thinking of chores.
Now don't confuse allowance, with the basics. What are the basics?
Keeping their room clean. Doing their homework. These are jobs
that should be done without question. Period.
Sit down with your children and talk about the "things" they want
to buy. Have them prioritize their items on a list, in order of
importance. This list can be considered their "Goal Sheet" -- the
reason they are saving their money.
Have them keep this list in their wallet/purse/piggybank, so they
will always be able to look and see what they are saving for. You
should also keep a copy of this list just in case they lose it, or
want to purchase something that's not on it.
The next time you are in a store, and your children want to use
their money to buy something, first ask them: "Do you have your
wallet/purse that has the money you've been saving?" You can
then ask them if that particular item they want to buy is on their
list.
Asking these questions will get them thinking about the items
importance. Is it more important than the other items on their
list? Let your child make the decision whether to buy or not.
Regardless of what you say, more than likely your children will
make the purchase even if the item is junk. That's ok! This is a
lesson your child must learn. Only when the initial thrill of the
toy wears off, or when your child realizes that the other items
on his/her list were more important, will they begin to understand
the value of their money.
Money management is a learned skill that comes from real
experience. It is very important that children learn the value of
money and the role that it plays in our lives. Teach them how
to make smart, educated buying decisions. Stress the importance
of setting priorities and working to achieve that goal.
Once your child achieves one of his or her goals, they will under-
stand what it takes to be successful. They will know how to budget
their money and limit unnecessary spending in order to buy what
they really want.
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