“Mom, I want that!” “Dad, can I have this, please?” You know this sounds familiar… even if you don’t have children yourself! How about starting the New Year out by teaching your children the value of a dollar and that it doesn’t magically appear in your wallet?
According to Forbes, children form money habits around the age of seven. You can begin simple teaching moments as early as age three.
Look for those teachable moments. You will find them everywhere! Just ask a simple question while driving or shopping for groceries. Whatever you may be doing, include them.
- While at the bank, explain you are making a deposit into your account so you may pay for the necessities in life; mortgage/rent, food, clothing. Then touch on the topic of saving for a rainy day, repair, vacation, or a new car. Feel free to make the examples appropriate to their age level, maybe save for a toy, video game system or clothing.
- While grocery shopping, explain the difference between a want and a need. You need milk, but you want candy. Discuss buying in bulk because it’s cheaper to buy more of an item than it is to buy one or two individually wrapped items. This is where you can use the “unit price” on the price tags to explain better deals, too! Also, when you look at generic items, explain that the generic tastes the same and it is cheaper. You can also mention coupons, savings from looking in advertisements and comparison shopping at this time.
- When buying a gift for a relative, explain that you have money set aside for “giving” in order to purchase items for birthdays. Explain that giving can also be charitable, such as Angel Tree donations, giving to church, donating money to local causes or buying Girl Scout cookies.
Family Fun (or game) night – Incorporate games into learning about money! Play board games like Monopoly, give them scenarios (like the Game of Life) where they must pick an affordable home, car and create a budget, or look online for other fun ways to teach finance. Ask if their school participates in Junior Achievement. - If you find yourself needing to buy something new, but must wait until you can afford it, share the reasons with your children so they can understand that this happens. Sometimes we have to wait to buy something we want until we have enough in savings. This is a great time to talk about goal setting. Think about making jars with categories like “Spend, Save and Give.” From the money they receive, advise them that they need to separate it into these three categories. It also helps to write down their goals, so create an area for the jars, the written goals, maybe a chore chart, calculators, etc.
- During back to school shopping, talk about buying generic folders over ones that have cartoon characters or pretty rainbows. You know they will only be used for one year and then they are ripped and torn. Consider telling them they have a budget of so much money to spend on the items they need, if there is any left, they can have it for their savings. This may make them more aware of what they spend, but if it doesn’t, explain that is less they will have for their jar or the item on their goal card.
- Seasonal ideas: When it’s time to shop for Halloween outfits, consider making them yourself and have your kids help! Pinterest.com and other online searches will make this an easier task! Start buying seasonal items after the season at discounted prices. Valentine’s Day cards, Christmas cards, gifts for teachers, back to school supplies, Halloween treat bags, accessories, or decorations, Christmas wrapping paper, etc.
Once you explain some of the fundamentals of money, let’s consider allowance versus pay. As long as it’s in your budget to do this, would you rather give a $10 a week allowance just because or a $5 pay based on their contributions around the home? If you haven’t discussed this yet, now is the time.
Children can “earn” money based on the amount of work (chores) they do. Consider making a “chore chart” to have a set earnings base for certain items. You can download an editable pdf Chore Chart from Apprisen. Fill in the mandatory (unpaid) and paid chores you want your child to accomplish such as: make your bed, set or clean off the table, take out the trash, feed pets, etc. and assign a monetary amount to each. This chart has “fines” that you can write in as well. A great example may be not listening the first time, talking back, or maybe something that drives you crazy that you are trying to encourage them to improve on (like not using a napkin). Incorporating fines shows that, as adults, we may have to pay a fine for speeding or parking in the wrong spot, so this teaches them that they must follow the rules (laws).
Establish a “pay day” for your children to help them understand that we have to wait one week or two weeks for our pay, so they must wait, too. Use pay day as a way for more teachable moments, such as adding up their pay, subtracting the fines and counting how much money they get in bills and coins.
Once they are a little older and understand waiting to buy an item, the value of a dollar, and having goals, introduce a savings account and talk about interest. Then they can start thinking about long term goals. This can be anything from saving for a big ticket item, vehicle and college. Forbes advises to have the college talk around ninth grade, discuss how much each school may cost, your budget, seek out financial assistance (financial aid, scholarships, grants, loans) and help them understand where they may apply based on realistic expectations.
Around the age of 16-18, start explaining credit cards. Explain that the balance should be paid in full at the end of every month (or by the due date) so you do not pay interest.
Practicing what you preach is the biggest thing! When it comes to everyday living and habits, your children watch what you do from a very early age.
Download a Chore Chart
Are you looking for a way to keep track of your child’s chores and allowance while also teaching them about responsibility and money?
Download an editable and printable Chore Chart for your child.
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