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
needless 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.
Where To Start
Don't assume your children know the meaning or purpose of a job, bills,
banks, etc...
Let them see you pay your bills. Explain to them how you have 'X' amount
of dollars per month to pay for everything. Point out the dangers of
getting into debt (credit cards). Explain that ATM machines are not
magic money dispensers that give you as much money as you need, for
free.
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.
It's Up To You
You can design your child's allowance and chores however you see fit:
weekly, bi- weekly, monthly, pay-per-chore.
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.
Once You Start
When your children earn their allowance for the first few times, they
will want to immediately go and spend it. Fear not. This should be
expected. Here is where you can start to teach your children.
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.
Conclusion
These are only some of the possibilities you might want to look into.
Regardless of what you can take from this article, adapt it so it fits
into your family lifestyle.
Money management is a learned skill that comes from real experiences. 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 understand
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 or
need.
Gregory Thomas has been writing effective money-saving tips for
SavingSecrets.com for over
six years. Hop on over and you'll find FREE money-saving articles, a
monthly newsletter, and even a FREE Ebook download just for stopping by!
http://www.SavingSecrets.com
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