Archive for the ‘Money’ Category

Talking with your children about family money issues and the family budget can be a difficult conversation. Parents are often afraid of scaring their children by making them think that the family is having money issues, but it can be difficult for younger children to grasp the concept of finite money anyways.

Younger children will ask for anything and everything that interests them. They see the commercials for a new toy, but their young minds do not truly understand the real cost of buying it. It is highly recommended to begin having regular conversations about money while your children are still young. Although the concepts won’t fully register with them, it is helpful to consistently frame their wants in terms of the costs. Try explaining that instead of spending $50 on a new game, you need to buy groceries with the $50. This can help younger kids realize the trade-off and it gives them a feel for what needs your family can satisfy for the same amount of money. Try to keep a positive tone to your money conversations and keep your patience if your child doesn’t seem to understand.

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Now that they are earning some money, teach them about saving it. Many banks have savings accounts for children. Help them decide how much money they want to have to spend and how much to put away. Make them a chart that keeps track of their money so they can watch it grow.

Let them spend some of it and be silly. Part of the fun of having money is spending it. I had a friend who would not allow their child to spend any of his money. He had over $100 in the bank but couldn’t use it. Letting your kids spend their money teaches them the value of things and how to use money wisely. Make sure your kids only spend what they have. Don’t loan money against the allowance they will receive. Our boss doesn’t give a paycheck advance, kids need to learn this too.

Teaching your kids about money will provide them a valuable tool for when they are older and get their first job. Make spending and saving money a success for them.

Another option is to have a set amount of allowance based on their age. My children earn half their age in allowance. My five year old gets $2.50 a week. In order to earn their allowance, they have to keep their room clean, do an assigned job each day, and help out with other things that we might need. When they don’t do jobs or keep their room clean, they lose part of their allowance for the week.

Some parents give their children money without requiring the child to earn it. I don’t like this option because I like giving a value to the money. When children have to earn it, it means more to them. However, if you don’t like the idea of putting your kids to work, you can still teach them about money. I would still suggest assigning a requirement to the money, such as good grades or good behavior.

Whatever option you chose, staring an allowance with your children will teach them about working, how to spend money, and how to save it as well.