Children do not come with an instruction manual and no two are alike. I recommend teaching children about money in stages. Advancing to the next stage should be based on maturity level and not by age since some children mature faster than others.
It is important to start teaching children at an early age to be responsible for small tasks like picking up their toys, clearing the dinner table, making their beds and putting their clothes away. Give them lots of praise to emphasize that their help is appreciated.
Give them a weekly allowance without assigning any tasks. Encourage them to save half and let them spend the other half. Playing board games like “Life and Monopoly” is a fun way to teach them to understand some basic principles of accumulating wealth.
Set up a saving goal to purchase something that your child really wants. Children have a short attention span, they will lose focus if reaching their goal is too far into the future. Keep repeating the process to reinforce the concept of saving money for things that they want. (Saving to buy Christmas gifts should be included as one of their savings goals).
For expensive items, agree to pay for half the cost so that the goal is reachable. Offer them a chance to earn extra money by cutting the grass, washing the car, cleaning windows and vacuuming the house. Tasks like cleaning their room, cleaning their bathroom or walking the family dog should not be included in earning extra money.
Open up a savings account and take them to the bank to deposit their savings. Keep them focused on their saving goal by asking them to show you their savings account. (Lots of praise!!!)
Add a monthly clothing allowance once your children are in their early teens. Take them to the mall and show them have to do some comparison shopping. You need to set strict guidelines that the money has to be spend on clothes and not for going to the movies. Allow them to save some of their allowance to buy expensive items like a new coat. If your child wants to buy expensive brand names, encourage them to earn extra money by delivering newspapers, baby sitting or cutting neighbour’s lawns. (Be prepared to live with their style choices)
Strongly encourage older kids to get summer jobs and even work part time during the school year. Not only will they learn the value of hard work but it may inspire them to get a higher education. Don’t restrict them in the spending of their money. Kids do well to learn about spending as well as saving, let them make a mistake or two. Better now than later when they’re buying a house or car.
Helping a young adult to get a credit card depends on their maturity level and if they have developed responsible spending habits. You will need to co-sign so keep the spending limit small and make sure that they have enough income to pay off the outstanding balance each month. No job, no credit card, be prepared to cancel the credit card if they suddenly become irresponsible.
Parenting is a very difficult job and it requires some tough love. Don’t give them everything they ask for and don’t feel guilty about it. It’s vital that children learn the difference between need and want. Make sure that children’s grandparents are aware of what you are trying to accomplish and support your methods.
Teaching them the value of money, setting saving goals and having a good work ethic are important life lessons. Start early, be committed and don’t give up. All the hard work will pay off someday when your children have successful careers and have the money to buy the things that they need or want. They may even thank you!