Parenting your kids in a way that helps them have tendencies of good money managers is easier than you think!
Start now to help them avoid credit card debt, encourage savings and avoid common consumer pitfalls.
- Start an allowance: Being part of a family means you receive the benefits of being in a family including some of the family money. Start a small basic allowance for your children starting at about age 4. Don’t tie this allowance to chores or behavior – they need to do chores and have good behavior no matter what! You can give additional pay for jobs or chores done above and beyond expected duties. Separate the allowance money into 4 categories with your child:
- Give: your child can choose charities or people in need to give this money to
- Save: this money is to be saved and built up. Can you help your child come up with a goal?
- Spend: This money is to be used for when your child chooses to buy something. Be sure that you don’t supplement this category! Always make them use their own money. This money can also be saved up for larger purchases.
- Invest: This is also a saving category. You may decide to follow some stocks or fun
ds together to explore how much money you can earn or lose in investments. You also could match these funds – 5% (to practice what it is like to have a 401 (k) or 403 (b)
- Help them make choices: Teach your child to choose between items, clothes, activities, food and MORE! Choices help to empower your child and teach them that they cannot or should not have everything. Congratulate them on good choices – like obeying your instructions J. Note: My 3 year old son Jackson often informs me that he is happy with my decisions by saying: “Good choice, Momma!”
- Let them live with mistakes. Sometimes, when a disappointment or mistake happens with your child, the best thing to do is NOT to fix it for them. Hold them while they cry out their disappointment, then help them complete a plan on how to fix it.
- Build in Opportunities for Lifeskills Education: In our house, part of earning the privilege of a drivers’ license will be to complete a comprehensive financial education course like those found at www.cccsok.org – this way we can avoid many money mistakes made in the first years of adulthood.