Teach your kids about money
It’s
one of the universal truths about kids: Get them in a store and they are transformed into beggars as persistent as any telemarketer. Every shopping trip leads to upturned faces and pleas of: “Mom, can I have this?” We like to blame TV commercials. Or overindulgent parents. But maybe the real culprits are habit and routine. When was the last time you went into a store without buying something?
Maybe it’s only natural that children copy our retail routines.
When everything is magically acquired by swiping a card and pushing some buttons, how are kids supposed to understand that there isn’t an endless fountain of purchasing power?
Children who are shown how to be responsible about money early on will be much more likely to stay in good financial shape down the road. First, you’ve got to give ‘em some money. You can debate how much allowance children should receive and who should manage it, but the reality is that kids can’t learn about money if they have no money to work with. Money management is a concrete skill. Yes, there are some abstract concepts you’ll eventually have to cover, such as compound interest, but it all starts with nickels, dimes, quarters, loonies and toonies.
I define an allowance as the money you normally spend on your kid put in your child’s hands so he or she can learn to manage it. Given regularly, an allowance not only provides kids with the bucks they need to experiment with saving and spending, it also gives them the responsibility for keeping their money safe and using it wisely.
Over time, even a modest allowance will get kids thinking about the value of money and how to make their dollars go further.
The alternative to an allowance, and a trap for most parents, is the dole system. That’s when your kid asks for some cash and you dole it out. Since the dole system has no limit, there is no reason for a child to set priorities or make a decision on relative value.
If you’re currently on the dole system and don’t fully appreciate what it’s costing you, consider keeping track of all money you hand over to your kid in a month. You may be surprised at how large his allowance is!