Thursday, January 21, 2010

Teach your kids about money

One of the biggest things parents have to learn is how to educate their children about finances. I don't mean to just give them the money. Truthfully that will never make them street wise. I believe that how my parents raised me about money is the best way. You have to appreciate what you have before you can really appreciate things. My mother has always told me that I would never understand why people get upset when others just jump on their furniture until they bought their own couch. Let me tell you that are so true. I get irate every time I see Jason run across the room and throw himself on the couch.

I’m definitely not a pro on this subject but here are some of the tricks that I have learned over the years from various people:

  1. Start with you – If you don’t understand money, you can’t teach your child. Learn about how to keep a budget and staying within those limits. Learn about cost saving things. Learn about investing. Learn about savings. Go to the experts and find out so that you can save yourself money as well.
  2. Teach them by example – Now I’m not telling you to explain all your bills. I wouldn’t want to do that and neither I’m sure would you. But I do keep a calendar that shows when a bill is going out or is due. They see me keeping an actual system they know that you are doing it. Explain that accidents do happen and how to pick up from it. Or when they want something special and you have a bill, show them the bill on the calendar. This, also, helps to keep you accountable for your finances.
  3. Set an allowance up - Start your children on allowance early. Now this doesn't mean that you just give them money every week. They need to earn. By earning the money, they feel like they are accomplishing something. A lot of people do the allowance by age such as if you have a 7 year old, you might give her $7.00. That is a dollar per age. If that’s too steep, just lower it down. But always do it so that it’s equal across the board with your kids. Now remember you are not just going to hand this money out for nothing, have them do chores around the house like doing the dishes, cleaning their rooms, etc.  Note:  I am not saying that you can never splurge for them.
  4. Open up a savings account for them – Take them to the bank to open up a savings account. Explain how important it is to put money into their account. Now the trick here and yes you will probably shake your head at me is to let them control the account. Yes when they first have money they will spend it frivolous stuff but what they will learn as they grow if you don’t give them more money, is that they have to save to get what they want.  Teach them how their money can grow in the bank.
  5. Talk about the prices of things – Talk to them about how much something cost. Look at what they want to get and how to go about getting something. If they want the newest game boy, take them to the store and see how much it is. Then talk with them about how much they have to say in order to get one. Something on the lines of: “Ok that costs $90; you need to keep your allowance for 6 months to buy that.” Don’t fall back on I’ll just buy it for you. They won’t learn about saving to get something.

So how do you help your child to learn about money?



Tater Tot Mom said...

In our family growing up, we never talked much about money and I regret not learning some basic principles. So we've made sure to tell Spencer about money and now he's all about how much things cost. It's so cute but I hope that he's getting better set up for his financial future then his Dad and I were.

Corrie Howe said...

Thanks for the suggestions. We do a lot of these, but not all of them.

Andrea said...

A great big AMEN to this post! VERY important!!
Blessings, andrea

starnes family said...

I absolutely agree.

Beyond the basics, we teach our kids to sacrifice and say, "No", often to little requests here and there that add up to nothing more than junk. I have no problem telling my kids, "We can't afford that." They need to know we have limits. So few kids are raised with this idea these days.

Emmy said...

My son really wants this new Lego toy and so we have talked about how much it costs and what he can do to earn the money for it. And now we have a chart and he is working to get the money for it. They need to learn that if you want money you need to work.

yonca said...

You're right, i need to talk about money with my son.Thanks!

Amy said...

thanks for the tips I know I will need them for sure as mine gets older.

Ms Bibi said...

My sons are 7 and 12 and we used to talk about money in the past little bit, but we've been talking about money, saving, credit card use a lot when my hubs lost a job in 2008 and couldn't find one for 13 months.

I take them shopping, we make lists together. I talk to them about budget and I allow them to help me make decisions on what to buy.I set up their accounts. They both understand the concept of debit and credit card. We talk a lot about people around us spending more then they are making.

We are also in a process of finishing our new house and I noticed since I included them in making decisions about colors, furniture and other stuff they respect it more even thou they didn't buy it with their money.

Alexis AKA MOM said...

Such a great thing so many kids (my husb case in point) didn't get this while they were growing up.

Great ideas :)

blueviolet said...

I totally agree with you on how important this is! I didn't learn a thing from my parents and it took a lot of mistakes for me to figure it out myself.

Michelle Hart said...

Great idea. I like this list... one thing I'd like to teach my child is 10-10-80.

10% of what is earned goes to God

10% goes into savings

80% is what they 'live' on.

But, being that we, as parents, aren't practicing that, I'm not sure if that would be hypocritical. On the other hand, if they learn that early, it would set them up for better money management when they get older.

J.B. said...

I think it's important to say that you don't choose to buy something for them and then tell them why instead of saying I can't afford this.
When children ask you to buy them something, that translates in child thinking to Do You love me? Whether you say no or yes, I think it is important to respond to the unspoken question they are asking.

Children wanting things it a great opener to finding out what they value. You can ask which thing of many they want most and why?

I grew up with tremendous abundance, I was in a family of ten children. My father supported us all. Our abundance was of the important things, like loving. I grew up learning that if something was meant for me to do, I would find the means to do it.

A blessing of abundance on each of you.

Danielle - Belleza e Luce said...

I'm from Friday Follow - I have a 2yr old and 3 yr old and they each have a piggy bank they get change to put it for good behavior, helping out, etc. It's not an allowance per say but they are learning to save.

Miss Rowley said...

what a great post that you have, i totally agree that kids need to learn the value of money. its really important in the day and age. visiting from sits, and now a memeber of the friday followers. keep up the great work. and I am following you now. :)

Miss Rowley said...

what a great post that you have, i totally agree that kids need to learn the value of money. its really important in the day and age. visiting from sits, and now a memeber of the friday followers. keep up the great work. and I am following you now. :)

Rannyjean said...

Good stuff on children and money. I am with you, we have to teach our children by being examples!
I came via Audreys and Follow Friday!

Coupon Clippin' Mommy said...

This is so important. Thanks for posting. I'm following from the blog hops. You can find me blogging here: