How to Teach your Kids Money Management

The youth in America are increasingly defining themselves by what they own rather than by their own self-respect. There is a consistent attitude of ‘buy now pay later.’ This trend will only lead to a financial downfall. As parents, we need to start teaching our children while they are young how to be responsible with their money. Giving your children an allowance is a great way for them to learn how to handle money.

Difficulty: Easy

Instructions

Things You'll Need:

• Money
• Envelopes

1. 
    

   Do not have your kids earn their allowance. This means don’t pay them for their chores. They are still expected to uphold their share of the work load, but only pay them for chores when they do your chores

2. 
    

   Give the allowance at the same time every week. This can be done with envelopes. Include an invoice with the money. If you give your children lunch money, break it down in the invoice. For example, an invoice for an eight year old would look like this- $2 for allowance, $6 for lunch money. Sign the invoice and include a little note encouraging them to spend it wisely to make it last.

3. 
    

   Never tell your children they have to save their allowance. Insisting that they save it will not allow them the opportunity to learn how to handle money. People learn how important it is to save after they have experienced what it feels like to be broke.

4. 
    

   Allow your children to do whatever they want with their money, as long as it is not illegal. Let your children be wasteful, pay others to do their chores, or whatever it is they want. At the same time, when their weekly allowance is gone- then it is gone. If they come asking for more money, tell them you will be happy to give them their allowance on the next pay day

5. 
    

   Let your children suffer the consequences of wasteful spending. If they complain they have no lunch money for lunch, ask them how they will solve their problem. They may try to make a lunch from the fridge, but remind them that you already paid for their lunch once, so they will need to pay for the food they take from the fridge. Your kids may go without lunch for a couple of days, (you can give them a big breakfast and dinner) but they will learn not to be wasteful with their money again.

6. 
    

   While you shouldn’t tell children what to do with their money, you can teach them the importance of saving, planning ahead, and spending money wisely. If your child wants a special toy or gadget, encourage them to save their money. Teach by example and teach with love.

Tips & Warnings

• Remember to be patient with your kids.
• Teach by example.

[FrazzledNanny]

on 5/22/2009 Great money management tips. All children learn differently so find what works for your children. Well written! 5*

[Codebreak]

on 4/16/2009 Great advice!

[ladym33]

on 4/16/2009 Good solid advice! 5