Teaching Kids to Spend Smart
When I was a kid, one of my favorite things to do with my mom and my stepdad was to wrap coins. This morning, I was doing just that, but this time, at my kitchen table. We always had change all over the house, and my family knew that change could add up. To this day, I use my change to donate to different causes.
Saving change was one of the best habits that I was taught as a child. I wasn’t taught a lot about money at a young age, but I do remember what little I was taught. You should be teaching your child responsibility with their finances from a young age. So, the question is, what can you do to teach your kids how to spend intelligently?
Give your kids an allowance. Instead of just handing your children money when they need it, give them a weekly allocation based on chores that they do. A family that I know has a list of things that need to be done on their fridge, and each of those chores has a certain amount of money associated with doing them. The child then initials when they’ve done the chore. You can also just give them a certain, regular amount of money, it’s up to you how you do it. This will teach them several different money management skills:
- How to decide what to spend money on.
- How to save money for something you want or need.
- How to not spend foolishly.
Encourage your kids to save. In their allowance, give your child denominations that will help them save. Instead of giving them $10, give them a five and 5 ones. Open an account at a bank or credit union for your child; many banks offer special accounts for children that have a lower minimum balance requirement. These same banks and credit unions offer special rates and programs so that children can learn about fiscal responsibility.
Give them… a credit card? Visa had a great idea when they started marketing the pre-paid credit cards. Put money on it, and use it to teach an older child (preteen/teen) how to responsibly use plastic without putting their bank account or credit at risk for the sake of the learning process.
Allow your children to know about the finances. You don’t have to disclose every little detail, but allow them to work on financial things with you. For example:
- Show them how to balance a checkbook. Have them sit with you as you write out checks for the monthly bills and other things, and then show them how you balance your checkbook with the bank statement.
- Let them help plan shopping trips. Make a list, help your child look through websites and the newspaper for coupons, and other things to help plan a budget-friendly shopping trip.
- Older kids: Share some of your budget with them and why you make the choices that you’ve made financially.
Let them get some sort of job. If your child is earning their own money, they are more likely to learn how to manage it well. It’s easier to spend Mom and Dad’s money then the money that you’ve worked hard to earn. They’re more likely to save and to learn how to manage their money.
Teaching your child to be fiscally responsible at a young age is a huge responsibility, but it will save everyone involved both headache and heartache in the future if you start early.
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