Money and Children: What To Teach Your Child
Parenting children to learn to manage money is important. Too many parents avoid this area of teaching until the child is an adult; 18 or older. When we wait to teach children about money, and how to manage it until they’re adults, they learn primarily as a result of their own successes and failures.
Some high schools offer “Personal Finance” classes. The majority of high school students, however, do not select these types of courses because they interfere with other required math classes for college preparation. Many parents report that their money management skills are often not what they’d like them to be or our finances are so complex that how we handle our money doesn’t mean much to a child.
Many children will learn to manage their money through their own personal experiences and the guidance you, as parents, may give them. In other words, children learn from trial and error. Below are some parenting tips that you may want to consider to help you child learn to manage his or her money.
Benefits of an Allowance
- Having a regular amount of their own income is the only way kids can learn to manage money.
- Children need to be able to make mistakes when the cost is minimal.
- Knowing the limit of available funds forces kids to:
- To think about how much things costs
- To make spending choices between the many things that they may want
- They have more appreciation for the things they buy when they use their own money
Once your child begins to show an interest in money and asks you for money to buy something that the child wants- start talking about money. It’s time to teach the concepts of:
- What money is, and is not
- How money works
- How money can be good
- How money can be misused
- How people can earn money
- The importance of spending
- The importance of saving
- When a child is ready to learn the fact that money can be exchanged for goods, they are ready to start learning the basics of money management. For many children, this may occur as young as three or four.
- How much should the allowance be?
There are plenty of diverse opinions on how much money should be given as an allowance for children. Some child development behavioral experts say a dollar should be given for each year of age. Others would suggest you match the amount their friends get. Neither amount may be appropriate.
When coming up with the amount, consider the following:
- Determine how much money you already give them. If your child does not get an allowance, you are managing their money for them by deciding what they will buy and what they will do. Their role is salesperson and manipulator. Consider letting the child begin to manage his own money. Refrain from doing all the work. Simple total up the amount you are giving them now (through you) and provide that amount as an allowance. You’ll save money and avoid some of battles along the way.
- Make a list of what they are expected to pay for with their allowance. Once you have the amount, sit down with your child and make a list of everything they are expected to pay for.
- Keep in mind the fact that kids have three uses for their money - spending, saving and sharing. Consider all three areas when you are coming up with the amount. In addition to setting the allowance, this process puts an end to the constant requests to buy this and that and to give them money to do whatever their hearts desire.
Most parents believe that their child has a certain amount of responsibility around the house. Responsibilities, however, have very little to do with allowances. In fact, if those responsibilities are not fulfilled, the loss of privileges would probably be more appropriate than the loss of allowances.
- How can a child manage their money if they don’t know how much they will be getting on a regular basis? Consider this:
- If a child does not need their allowance that week, is it acceptable not to do the chores? And, do we really want your children to ask, “How much?” every time a parent ask them to do something around the house?
- Money is an important concept to teach. Yes, many schools are beginning or continuing to teach students the importance of having and spending money.
- Is your school teaching what you want your child to learn and know about money?
