What a coincidence. Today is my first day back in the classroom after spring break and my very first class is Personal Finance. April just happens to be Financial Literacy month.

This week, I’d like to concentrate on money management.

Although money doesn’t buy happiness, the lack of money leads to a lot of misery. You cannot be truly happy if you don’t have enough money to take care of yourself and your family.

Most of my finance students tell me that they wished they had taken this course in high school. I laugh because I have yet to meet an 18 year old who listens to financial advice from anyone.

I am, however perplexed at how well we do as parents in preparing our children for careers, families, morality and even cleaning, but how poorly most of us do in preparing our children for the financial responsibilities of adulthood.

Most of us discuss sex more openly with our children than we do money. Many young people are thrown into adulthood without a clue as to how to properly manage money and as a result many mess up their credit and finances for years to come.

Here are 5 easy ways to give your children practice with money. You can start them as young as first grade.

Savings

Savings is important and most children have a piggy bank in order to save money. However, we are missing one of the important aspects of savings – interest.

Set aside one day per month as “interest day.” Agree to pay your child a set amount – say 5 cents for every dollar they have saved.

Although your personal interest rate is much higher than any bank would pay, it teaches children the value of savings and how savings help make your money work for you.

Allowance

Many child psychologists disagree about having a child EARN an allowance, but giving your child a chore or two and paying them to do it teaches them work ethic, responsibility and gives them decision-making abilities with their money.

Make sure that the allowance is age-appropriate and fits into the family budget comfortably.

Help you child make decisions on how to spend their allowance, but it is their money, the ultimate decision should be left to them (within moral and safety reasons, of course.)

Encourage them to save part of it and to give part of it to charity, but allow them to choose how to spend their money.

As the child grows older, they may negotiate for raises in allowance, but just like in the adult world, increased pay leads to increased responsibility, have them decide what additional duties they will perform and agree on an increase that fits.

Budgeting

The designer clothes dilemma was a problem in my home.

My children’s friends would tease them because they didn’t wear the latest designer clothes. These same friends lived in section 8 housing and received AFDC, but somehow managed to find the money for $200 sneakers.

Our family chose to buy our house and set aside college funds instead, yet this didn’t help my children to feel better in school.

I solved the problem by taking an inventory of what each child needed – underwear, socks, etc. before school began. Then I gave each child the same amount of money in order to purchase their school clothes. They had to purchase at the minimum what was on the list AND they could spend what was left over any way they’d like.

My children found the best deals ($11 for jeans), $25 for sneakers, etc. They are both 27 now and both of them shop for clothes at bargain stores to this day.

Bill-paying

Most kids have cell phones nowadays. Why not make them responsible for the bill?

Make sure that their allowance is large enough to cover the cell phone bill.

Sit down with them and go over the bill each month. Make them give you the money to cover the bill. If they don’t have the money, then the same thing happens to them that happens to adults who don’t pay their bills.

This teaches children how to manage their money and budget. They will learn to make good choices when it comes to managing money. (You don’t have enough to buy that new video game AND pay for your cell phone – which is more important to you?)

Job

After-school jobs are a good way to teach teens responsibility.

Each family must decide what its priorities are when it comes to jobs, extra-curricular activities and school. For example, in my house, if grades slipped, the job had to go, school was the priority. Also, my husband and I felt that our kids had only one chance to be teens and get involved in school activities, therefore we left the decision on whether or not to work up to them.

Both of my children had after-school jobs as teens. My son never participated in extracurricular activities but my daughter managed to hold down a job, keep her grades up and captain her soccer team.

Once my children began working outside of the house, we charged them “rent.” It was usually just a small percentage of their income (10%) but we wanted to teach them that they must contribute to the household that they were living in.

My husband and I did not need our children’s money. We put it into a savings account for them without their knowledge. When they graduated from high school and were ready for college, they had an unexpected nest egg to help with expenses.

No matter what your children’s age, it is important to teach them money management in order to prepare them for the complicated adult world.

These are a few suggestions to get you started. I’d love to hear more ideas from you.

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About living4bliss

Mental Health Food is the place to stop to get your bliss on everyday. I give tips, hints and sometimes a little silliness to help you navigate the challenges of life. We have a great community of positive bloggers that keep the bliss going all day every day. Make sure to visit their blogs, too. Mental Health Food is a product of Believing Life Is Setup for Success, Inc. (B.L.I.S.S.) in Thornton, CO. We have been in the business of teaching success since 1991. We provide workshops, consulting services and now videos that help people just like you start and maintain successful businesses and personal lives using what you already have. Enjoy a daily dose of Mental Health Food; nourishment for the mind.

2 responses »

  1. I love your ideas. My children are still pretty young so I still have the opportunity to utilize many of your suggestions. Thank you for the helpful reminder.

    • living4bliss says:

      We forget to teach them about money, then we throw them to the wolves.

      BTW – I taught my children about money and they still did their own thing. LOL At least I tried.

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