There are no lessons for your kids in the school that will teach them how to value their money once it starts coming in. For this reason, the responsibility to teach them what money means and how they should value it falls squarely on your shoulders as a parent. This is incredibly important to teach your child as if you do not, they could easily fall into bad habits when it comes to managing their personal finances.
Even if your child is not even getting their allowance yet, you should start teaching them what money means and how they should look after it. Here are some tips that I employed with my kids that may help you out when teaching your own children how important money management really is.
When I first started giving my children their allowance, I opened up the home bank where I was their bank manager and I ran things just like a normal bank would. I gave me kids plastic credit cards which they could use for small items and to pay off chores as well as giving them a current account and a savings account. In order to better manage their money, I also had weekly meetings with them where we would discuss their savings goals, current state of affairs and any impacts which the future might hold. I found this to be a great way to get the kids to understand how the banking system worked.
Double Your Money
In order to get the kids to understand how to save best, I offered them a 50% bonus on any savings which they made over a 3 month period. One of my kids started out well and saved quite a chunk of his allowance, at the same time my other child decided not to save anything and was happy spending their money. After the first prize of 50% was handed out to my eldest boy however, my youngest soon realized the ball of saving and began to save as much as possible to get his bonus too.
I decided that I would never give my children their allowance unless they had earned it though weekly chores. This really helped to let my kids know that nothing comes for free and if they wanted money in their pocket, they had to work for it. I created a list of weekly chores which were required as well as some bonus chores which would allow them to earn some extra cash, the kids jumped on it right away and now they understand that if they want money, they have to earn it.
I decided to give my kids a free reign when it came to spending their money which proved to be a great idea. The reason for this is that they predictably bought sweets and treats with their money and then felt bad when they couldn’t afford bigger items. I was able to use the bank meetings to discuss with them what they bought versus what they would like to buy and they quickly learned that spending frivolously was not the answer.
How do your kids treat their money? Let us know in the comments section below if you have any great ideas to help them respect money more.