How to teach kids about money at home.
Raising children is difficult, and one of the more difficult aspects of child-rearing is teaching them about money.
One of the roles of a parent is to prepare children for adulthood, and one of the most important things an adult should be able to do is handle money, and make sure he has enough money for the future. Teaching children about money is something that some parents do well and others do not.
There are several on-line sources available to parents who want to know how to teach their children about money. Also, many financial providers offer informational articles about the topic.
From two sources - the National Association of State Treasurers Foundation, RealMoney.com and Charles Schwab – here is advice most financial advisors agree upon:
Let them know what’s going on - Talk to your children about your financial situation. Explain to them your plans for saving money, and how you decide what to spend money on. If they are old enough to understand it, show them your monthly budget so they can see what you spend your money on and how much things cost. In many cases, children will see ways to save money (turning off lights and water, for example).
Let them help with the bill-paying – Whether you pay bills with checks or on-line, let them sit with you as you go through the process. It’s financially educational.
Be consistent with money the children can spend – Schwab suggests you give your child an allowance around the age of nine or 10 and make them live according to the budget set by that allowance. Make them understand what you are paying for in terms of their needs, and make them understand that they are going to be paying for their “wants.” Making a child use his or her own money to purchase a toy or game immediately teaches them the value of money.
Be consistent with allowance rules – There are differences of opinion as to whether allowance should be “earned’’, but if you decide that is the case, be consistent. Make sure the job is done before the allowance is given.
Teach them to save – Give them a savings account, and tell them it is money they cannot spend until they are 18 years old (or going into high school, or whatever date you set). A great way to get them to put money away is to offer to match their savings, perhaps 50 cents for every dollar they put into the account. Marybeth Vigeland of RealMoney.com suggested giving allowance in $1 bills so that the money can be doled out by the child, some for saving, some for spending.
Create a “savings’ jar for a special purchase – If it’s a family vacation, or something for the home, let the jar represent a financial goal. Make sure to make regular deposits in front of the kids, and if they find a coin and want to contribute, let them do so.
When you say “no’ to an expenditure, explain why – Let them know that you have a budget for the kinds of items requested, and that you don’t have the money in the budget at that time. And when you say ‘no’, stick to it.
Let them know why you have had to say “no’’ to yourself – Tell them about the things you don’t buy yourself because of the finances involved.
Take your kids grocery shopping – Many parents try to find a way to leave the kids at home while they grocery shop, because it is easier. But when they are old enough, have them shop with you and teach them how to comparison shop. Many grocery stores offer “price-per’’ numbers (price per ounce, for example) and the children can figure out which is the better choice from a cost aspect.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.