One thing my parents were very good at was teaching me about money. I grew up knowing that money couldn’t be wasted and that you couldn’t have everything you wanted. I am very grateful for this lesson.
In college, when my roommates would call their parents to bail them out, I had a lot. I had already figured out how to budget. I took a fresh $20.00 bill from my checking account each week. This covered my food, entertainment, and any extras I might need. As you can imagine, there weren’t many extras on a budget of $20.00 a week.
Teaching my children about money is very important to me. I have friends who didn’t learn how to handle money as children and have found it very difficult to transition into adulthood.
I’m still not perfect at this, but I feel like I’m off to a good start. Here are my best tips. My oldest son is seven, so this is definitely a work in progress.
Give them an assignment. It doesn’t have to be a lot of money. My seven year old gets $2.00 a week and my five year old gets $1.00 a week. In my house, getting an allowance depends on doing homework, so they learn that money is earned. Giving children an allowance teaches them to respect money. Finish the “can we buy . . .?” he asks and changes it to, “How much more money do I need until I can buy . . .?”
Give them freedom with their allowance. My five-year-old daughter never has money, she spends $1.00 every week. That is her choice and often she is disappointed when she sees something she really wants and doesn’t have the money. But she will eventually get it.
Encourage them to open a savings account. My seven year old daughter has already opened her savings account. She had about $10.00 that she had saved, the minimum at our bank is $25.00. I told her if she raised another $10.00 she would give her the last $5.00. She went back and forth for a while. She wanted the extra $5.00, but she also wanted the junk that she regularly buys at the store for $1.00. Finally she saved the entire $20.00 and we went to the bank. She thought it was a really amazing experience with the banker offering her something to drink and asking her questions.
Our bank, Wells Fargo, offers a special savings account for children. There are no fees and every time you make a deposit you are awarded special Wells Bucks that you can save and redeem for prizes. Give kids an added incentive to save their money.
Teach your children to work. When I was around fourteen years old, my parents told me that they would pay my college tuition, but if I wanted to go to school, I would be in charge of my own room and board. I definitely wanted to go to college anywhere outside of my hometown. I started working when I was sixteen and saved enough money to pay for three semesters of living expenses.
I was only able to save so much money because I knew how to work. Chores were a daily part of my life growing up, and I’m thankful for that. I have tried to instill these values of hard work in my children as well. Each of my children is responsible for keeping her own room clean, and my two older daughters have additional chores like unloading the dishwasher, feeding the dog food and water, cleaning the bathroom counter, and emptying the trash. It takes my five-year-old daughter about an hour to unload the dishwasher, and she usually complains all the time, but she’s learning an important lesson about responsibility.
Be a good example. My seven-year-old son asked me the other day if he had any coupons to buy cottage cheese because he hadn’t had any in a while. My three year old got so excited the other day because she saw a Life Savers coupon, she couldn’t wait for us to buy them. She still doesn’t quite get it, but she is understanding the correlation between buying things and coupons.
Nothing you teach them will teach them more than what you do. Children absorb more than we know. I don’t know how I knew my parents didn’t believe in car loans. I don’t remember having any major discussion about it, but I just knew.
Raising your children to be smart with their money is one of the greatest gifts you can give them as a parent. Take these small steps to help, encourage and educate your children.