Family Budget Fridays: Teaching Your Kids About Money

Family Budget Fridays: Teaching Your Kids About Money

As mentioned back in my Family Budget intro, I’ve got my hands in many things.

There is one thing I can say with certainty about trying a lot of things in life: When you take the time to teach a skill to someone, it will make you a wiser and more efficient executor of that skill yourself. Make sense? E.g. Want to be a better basketball player at your Friday open gym? Coach a kids basketball team. In nearly every walk of life, this example holds true. The same can be said for teaching good financial habits in your household.

Kids don’t need a lot of money, however, learning how to manage the money that they have at an early age can help them to avoid some serious stress later in life. Most of us with children claim that we want the best possible life for our kids, so it would only make sense to educate them on how to manage their money.

Regardless of your affluence, I personally don’t think it’s a good idea to offer kids more money than they need for educational purposes. After all, you more than likely offer them everything that they truly need, so beyond that, they’re getting some gravy.

Money should be respected. Not feared, and not flaunted. I’m a firm believer that if kids want something that’s expensive, they need to work for it. You can take it all into consideration, from grades in school to effort offered in extra-curricular activities to bonuses for good behavior and not beating the crap out of a rivaled sibling. Decide on a salary for youngster or youngsters and have a sit down to let them know why they make what they do. If you really want to smile, allow for a short period of negotiation that you’ll “sleep on.”

Most kids who get an allowance want to spend, spend, spend. But really, what do they need to spend it on? Here is the first life lesson in necessity vs. desire. Sometimes the categories intertwine, but when teaching kids to manage money, it’s best to teach skills of division to enjoy the other side of the spectrum: Money multiplication. For kids, the three following categories present a wonderful money-management education:

Save. Spend. Share.

For every weekly allowance or stipend payment you offer your child, teach them to put some away to be saved or wisely invested (sure, run with it). This is a great time to open a savings account, and teach your child about savings with interest as well. Another portion of the weekly/bi-weekly funds can be spent, or even better, saved to be spent on a larger purchase. The final portion of their choosing should be shared.

The sharing can be something they offer as a religious practice, something they offer to a charity, a special something they choose to purchase for the family or a friend: Whatever the case may be, it offers a wonderful sense of community, and allows kids to see that blessing someone else with a gift of their means often feels better than spending the money on something frivolous. It’s also a great time to teach the lesson of “giving of time/self” when there’s no money to be offered.

In time, kids will quickly see that they can accumulate funds, and still have money to spend on things that they want while sharing with others. These are great habits to develop, as they will carry over into adulthood. As kids get older, you can also introduce them to the positives and perils of credit and how to properly use it as well.

(Image via: Babble)