Teaching Kids About Money Part Of Responsible Parenting

In Janet Bodnar's book "Money-Smart Kids" she writes "For better or worse, children learn by observing and imitating the people they care about, especially their parents. That's a scary though for us parents, because it means our behavior is a stronger teacher than all our carefully chosen words of wisdom."

If we try to avoid this topic with our children they will then learn about money from their peers and the media. The influence that TV has on our kids became apparent to me the other day when my 2 year old asked me to go to Chuck E Cheese’s. We have never been there before or even discussed it. She just saw a commercial and decided it was the place to be. If she is already influenced that much at the age of two, I need to quickly step in and make sure I am the one teaching her what is important, not Nickelodeon.

I needed a game plan to teach her how to be a savvy shopper, super saver and cautious credit user. Since I am using an allowance to teach her how to manage money then it should not be attached to chores. The way I see it, basic chores, making their bed or helping with dishes, should not be linked to allowances. "That way, children will learn the value of cooperation and experience what it feels like to contribute to the family." If you want to teach your child the value of work then you can give extra money for bigger chores that they would not normally do like racking the leaves or washing your car.

So, how much is a fair amount for allowance?

According to Family Education, the four main factors in figuring this is your child’s age, your family’s income, where you live and what the allowance is suppose to cover. The easiest place to start is a dollar for every year. As your child gets older you may need to adjust that accordingly to what the child is responsible for budgeting.

After you decide on a figure it is very important to help your child with a system for budgeting. Using a three jar method is a simple way of delegating money for spending, savings and charity. Another option is the Money Savvy Pig. The bank is divided into four different chambers, save, spend, donate and invest. How much your child puts into savings should be their decision, it may surprise you how much they decide to put away. Rewarding them for their efforts can also be a great motivator. Offering to match their savings will not only help your child’s savings now but will also set them up with good habits for the future.

We got my daughter a bank for her second birthday. She learned real quickly on how it works and asks almost daily for change to put into it. So after what I have learned through my research we are going to be a bit more conscious about what we give her. She is still too young to worry about budgeting but we are going to start by giving her $2 a week in change. All of it will go into savings for now and when she fills it up we will take her to the bank to open her own account. By the time she is three we will be able to start giving her a bit more responsibility when it comes to spending. Hopefully she will have a grasp on the importance of saving and not just want to spend all her allowance on candy and toys.

Most importantly you have to trust your child with the money you give them. You can not swoop in and try to save them when things go wrong. You have to let them make mistakes so they can learn from them. As hard as that may be, it is a lot easier for your child to have to make their lunch for the rest of the week because they ran out of lunch money on Wednesday, then seeing them have to file bankruptcy latter on because they have racked up too much credit card debt.

Jennifer Billy
JennBilly@gmail.com
http://MoneySavingSecretsBlog.com