Hey Kids, Money Doesn’t Grow on Trees!
As parents, our primary job is to teach our children how to survive in real life when we are not there to help them. Learning the value and how to effectively manage money is at the top of the list for survival life lessons for our kids. If you have little ones, start early; but, if you have teenagers, it’s never too late to teach them that money doesn’t grow on trees. Every family is different and household income might prevent some approaches to teaching the value of money, but here are some areas where you can teach your kids important life skills regarding money.
Earning Money as a Child, Tween, or Teen
Teaching your child, the value of money means they must have some of their own money to spend. Depending on your income, personal values, and the age of your child, you might approach this in a variety of ways. Providing a weekly allowance is a common strategy, but also isn’t every family’s cup of tea. An allowance not tied to chores might also teach your child they don’t have to do anything to earn money. This can reinforce the idea that money DOES grow on trees. On the other hand, some might argue being part of a family and living in a household means you chip in and do your part without payment. Here are some other suggestions of ways for your child to earn money outside of birthday money and holiday gifts:
– Offer payment for tasks. Pay your child for tasks and chores beyond normal expected things like keeping a bedroom clean and doing dishes. For example, have your child clean and wash your car, organize a bookshelf, rake leaves, feed the family pet, clean a bathroom, or mow the lawn. The possibilities are endless, and you can easily tailor tasks to your child’s age.
– Pay per book read to encourage literacy. Some children are naturally bookworms, but others need to be encouraged to read outside of school. This approach works especially well in the summer and comes with a bonus, any time your child spends reading is less time he or she has in front of a screen.
– Pay for grades. Teens who are involved in extracurricular activities and athletics might not have the time for a part-time job. The school requires them to meet certain standards to participate, but you can support by paying so much per A, B, and C. Higher grades mean more money.
– Encourage a part-time job, babysitting, walking neighborhood pets, or any other job your child can do independently. When school activities are too much, this might mean a summer job and not working during the school year.
Save, Spend, & Share
Whether your child receives money gifts or is earning money from tasks or a part-time job, you need to teach them how to allocate funds, so they are saving, spending, and sharing. For little ones, you can use three jars, plastic containers, envelopes, or piggy banks and help them put money into each. Allocating money for different uses is the precursor to creating a budget. As your little ones grow and maintain this habit, learning how to create a budget as a teenager or young adult will come naturally.
Teaching the Cost of Everyday Items
You can help your kids understand the value of money by teaching them how much it is to buy everyday items like milk, bread, eggs, gas, and clothes. You can begin these lessons at a young age by including your children in your trips to the grocery store. Take some time to pre-plan by making a list and explain how shopping with a list or budget prevents impulse buying. As you shop, you can also teach your kids about brands, pricing, comparison shopping, and how to get the best bang for their buck when planning meals and snacks for a household. When kids don’t know what things cost at the grocery store, they get a rude awakening when they are on their own. You can help open your teenagers’ eyes by giving them a list and a limited amount of money and having them shop for you. Similarly, if your teen is driving, you should make them pay for gas with their own money or at least some of the time, so they understand the cost of driving.
Encourage Goal Setting
Although you need to teach kids how to save and spend wisely on everyday items, it’s equally as important to teach your older kids how to save for a big-ticket item. Maybe they want to buy the newest iPhone, take a class trip abroad, buy a car, or buy an expensive designer item they have been dreaming of for months. Goal setting stems from teaching them about spending, saving, and sharing in their early years. Help your teens create a budget and adjust their savings amount to meet their goals. The teen years are also a good time to open a checking account for your child; teach them how to make deposits, write a check, use a debit card, and how to balance their monthly statement.
Teaching the Power of Interest
Interest is a concept that can be tricky to teach little ones, but by the time your kids are tweens, you can begin to show them the power of interest. Once you open a savings account for your child and have them regularly contributing, you can sit down and show them the statements. Of course, the return on a regular savings account is low, but nonetheless, you can show your child how the bank adds “free” money to their account when they save. Take the time to teach older kids about the “bad” credit card interest. Regardless of your views on credit, you should teach your children about credit cards, their dangers, and how to use one responsibly, or make the case why it’s best not to use one at all.