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.
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Stage 1
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.
Stage 2
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.
Stage 3
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!!!)
Stage 4
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)
Stage 5
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.
Stage 6
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.
Stay Focused
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!
As a homeschool teacher, I have taught my teens about money issues and how to be prepared for their future when it comes to banking, credit, college, savings, etc… If you don’t teach them while they are young, they will not understand the concept of being financially free and using your money wisely.
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Parents put too much faith in the education system. Banking, credit, investing etc… are not covered in math class. It is sad that many university grad students don’t realize that credit card interest of 1.5% charged monthly equals an annual rate of 18% on unpaid balances.
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Have you ever heard of the Uncle Eric Book Series by Richard J. Maybury? It is all on economics for kids and teens and they offer a study guide, activities, essay assignments, thought questions and exams. Many kids/teens like the series because it is in Q/A form. His first book was called, Whatever Happened to Penny Candy? He has other topics too but I started reading them from his first book that we love. My husband has bought many of the books and gave them away because that is how much he loved them.
Richard J. Maybury is the publisher of U.S. & World Early Warning Report for Investors. He has written several entry level books on United States economics, law, and history from a libertarian perspective.
Anyway, his books are part of what I taught my kids in school. My oldest daughter hates credit cards and my youngest who is 16 is not into money believe it or not. Now maybe if they had been boys I might have had a problem. LOL!
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Thanks, I will check him out. I have some young nieces that are in their teens who love to read. Christmas presents that are educational, got to love it. LOL
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Thank you for this! I have 3 young kids (under 7) and I definitely want to teach them about money and saving as I was not taught by my parents growing up and I suffer as an adult with a poor relationship to money. A healthy relationship to money can be such a deal breaker in the quality of ones life.
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You are welcome, when my daughter was 8, she wanted to take horseback riding lessons. I lied and told her we couldn’t afford it. She came back with the want ads of our local newspaper. “Dad, can I make enough money delivering papers to pay for lessons”? I lied again and said YES! Too be fair, I paid for the lessons, took half her monthly pay and put it into a savings account. I let her keep the other half. She thought that she was paying for half the cost of the lessons and I was paying for the other half. When she graduated form university, I gave back all the money she gave me over the years for things that she wanted to buy!
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Wow that is such a great story! Thank you for sharing and for the insight! What a gift you gave her, so much more than monetary!! Thank you for the inspiration 😀
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Children are a gift that never stops giving. Too many proud moments to even count.
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Great ideas, again!
I give my kids some money each week so that they will learn the value and use of money. I call it their “sharing in the family wealth”. It is the benefit of being part of the family. Correspondingly, I tell them that they also have to “share in the family responsibilities”, which involves their house chores.
I have not started them on saving for something, but will do so soon.
I like to avoid saying that I won’t buy them something on the grounds of not having the money for it, but would rather explain that I have other priority uses for the money.
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Good point about explaining that you have other priorities for your money.
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