Teaching Kids About Money
Your Children Can Easily Learn To Be Takers and Not Givers
So many people ask how to teach their kids about money, hoping they can get a 1-2-3 formula to use that will help their child become a wise caretaker of his/her money. Many parents ask this question because they are terrified that their children will turn out just like themselves when it comes to spending money. They hope that the “Do as I say, not as I do” method might actually work in this case. They almost always learn by example. They learn from your examples, dad and mom.
STEP 1 Put into practice the things that you want your children to learn. If you expect a 5, 6, or 7 year old to learn to handle money wisely, surely you as a grown adult will be capable of doing it too.
STEP 2 The second step in the formula is to teach children how to earn money before they learn how to handle it. This should seem logical and you may say, “Well of course everyone knows that!” But do they? The people we deal with on a daily basis don’t seem to know that. How many people do you know that spend money they haven’t even earned? How many dollars worth of credit card debt do you have? Isn’t that spending money you haven’t earned yet?
The best way to help children learn positive work ethics and give them a chance to earn money is through chores. There is nothing wrong with age appropriate chores and jobs. Chores help to teach children the weights and balances of earning and spending. If you earn $10, you can spend $10. A lot of parents live with the idea that one can spend $10 and then frantically try to work to get $10 to pay for it. Another alternative that seems to be gaining popularity is to mooch off of someone like their parents or to become indebted to a credit card company.
It’s no wonder children are getting confused. It is because they are receiving mixed messages from dad and mom. This is why it is so important for parents to get their acts together first. Whatever you do, don’t give your children allowances when they haven’t earned them. You are doing your children a great injustice when you do this. They learn early on that they don’t have to do a thing because mom and dad will pay for it. Twenty years later, parents find themselves with a 28-year-old man sitting on their couch.
By giving kids money and “stuff” without having to earn it, they learn to be takers and not givers. Then we wonder why, as adults, they have the attitude that the world owes them something for nothing. They have learned that they have no reason to bother to lift a finger to contribute to society. If you’re “tight with money”, children have a very keen sense of justice. They usually know when mom and dad are not paying them because things are in “crisis” mode.
STEP 3 is to be sure and teach your child about savings. There is no better way for a child to learn to save than for that child to quickly spend all of his money at a bubble gum machine and on candy bars and then see a sibling, who has carefully saved, be able to buy a really cool toy the next time they go shopping. Another way for kids to learn about saving is, when they desire something very much, to have mom or dad tell them to save their money for it. You can’t break down and buy it for them because you will defeat the purpose. Just wait and after a while, you will come to realize how exciting it is for a child to save and save and then finally reach their goal’s end.
With more money comes more responsibility. Keep the amount of money you give your children in proportion to how responsible they are. This will help them to learn to use their money wisely rather than to waste it because they have more than they know what to do with. Teach your children to use a small part of their money to buy gifts and to give to others. Remember, the whole object is to learn to be wise stewards of their money and to be givers not takers.
