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Children who never need to budget, think about money, or wonder how dinner gets on the table every night, will grow into careless adults. They run into financial trouble at a young stage, and hopefully, learn from these mistakes before they reach thirty – but you can help your child understand the value of money already now.
Watching and learning
Teaching them to handle money with care and understanding how to budget has a lot to do with how to master this yourself. Your children observe and copy your behaviour; spend without thinking, and they will doubtlessly do the same.
Read and learn as much as you can yourself, and attempt to adapt what you learn so that your children can make use of it. You can find a lot of good resources online, such as Michael Banks and this age-by-age guide, so there are no excuses for not coming prepared to your finance lesson.
Giving them financial skills takes time but it will stick with them for the rest of their lives; you can start right away by setting a good example.
Budgeting: Allowances?
The skill of budgeting is something a lot of parents introduce by giving an allowance each week or month. It’s a basic idea and usually works quite well – the older your child gets, the more she will want to save her money for something she really wants; spending it all at once is a lesson learnt on its own.
Allowances are often tied to completing chores, which may work well for a lot of families. It replicas our daily life by making the allowance a rewards – or payment for a task completed.
Beware of teaching them the wrong kind of lesson, though; your child may realize that giving up on her allowance means that she doesn’t have to do her chore either. Shocking as it may be, this is deal your child may be able to live with, and you’ve ended up teaching her the wrong kind of lesson.
If tying allowances to chores has worked well for you so far, then continue with this. If not, you should consider using this allowance purely for teaching budgeting skills. Expect them to complete the chores nonetheless – after all, nobody pays you for making your bed or picking up your toys from the floor, even though it would have been great.
Saving: Contributions
Extend the basic mindset of saving some of her allowances as she gets older. You can start early and teach her that the money she saves is able to generate a profit all on its own and before you know it, she’s looking at a free excel budget template and managing their income. A popular parenting technique that seems to be working is to have her work towards a certain goal by saying you’ll match it when she reaches the number you’ve agreed on.
Having more than one child around the same age opens up for competitive games, too; maybe the one who reaches the target first gets to choose your next holiday destination?
Teaching them the value of money is one of those magical things we do as parents to help our children out; it’s our responsibility if you will, and a part of making sure they get most out of life and a bright future.
