I have to admit I was never one to save for a rainy day. I believed that money was meant to be spent. My motto was you can’t take it with you so enjoy it while you are here. I always had a job since I was a teenager, but I wasn’t taught to save money. My parents were generous and made up for any money I was lacking. As I matured and became a mother having a 401k, along with savings accounts, and paying my bills before the due date became as normal for me as cream in my coffee. Being diligent about my finances has no doubt paid off. Teaching our children at a young age the importance of saving and using their money responsibly is one of the best lessons we can pass on to them.
Children learn about the dollar at a very early age. When we go to the coffee shop my 3 ½ year old understands that I have to pay for the brownie. She actually asks to pay for it by handing my debit card or cash to the clerk. If you ask her what do you do with a credit card at the end of the month, she will tell you, “pay it back.” Now 3 ½ may seem a little young for kids to start thinking about money, and age appropriateness is something each parent has to determine, but I say the earlier the better.
Ideas for Teaching Your Children the Value of Money
It is important for kids to realize that money really does not grow on trees. There is nothing wrong with them earning an allowance. Teaching them that they are not entitled to money, but that it should be earned will teach them to value a dollar. They will be less likely to use their allowance foolishly if they are working to earn it. Give them chores around the house and have a set allowance amount that you decide to pay them. Set the date that you pay them just as though they are receiving a paycheck. If they do not do the chores then they do not receive the allowance, or there are deductions and further consequences based on the rules of your home.
If they use all of their allowance before the next one, don’t give in and give them more money. This teaches them a good lesson on how to use their money wisely. I assure you they will think twice about spending all of their money at once.
Most kids want to spend their money, and if they earn it, well they should be able to spend it, but not without first saving a portion of their allowance and other money they get throughout the year. First, take them to the bank and open up a savings and checking account for them. Familiarize them with how the accounts work.
Second, depending on their allowance, decide on a percentage that they are to save each month, . Even if it is 3-5% it makes a difference. If they are old enough let them make the deposits themselves. Explain how their money compounds in a savings account. Depending on your finances you may want to do a match for whatever amount they put into their savings. For example, if they deposit $5.00 you deposit another $5.00. This is a great way to reward your child for saving money and contributing to their nest egg.
You make the decision on whether the money they get for holidays or birthdays are theirs to spend as they choose or if you want them to put a portion in their savings. Once they see how much they accumulate in savings they may be willing to put money in from special occasions without being told.
Educate them on the Importance of Paying Bills On Time
I doubt if your children have to worry about paying bills. However, teach your children about paying bills in a timely manner. Let them see you being responsible by paying your bills on time. It they are old enough to understand, explain the concept of interest rates, principal, and late fees. Also, talk about the consequences of not paying your bills. Tell them about that dreaded three digit number the credit score and how having a good credit score will effect them in the future.
Look for the Deals
Inform them of the beauty of a bargain. If they want to spend their money on a movie, why not encourage them to go to the matinee. If they simply must have that CD why not help them search online for it at a lower price. Teach them how to be a smart shopper so that their hard earned dollars go further.
Teaching our children to give not only pleases the Lord, but teaches them the spirit of giving. Find an organization that your family is interested and donate as a group. As Christians we are taught to tithe. Most likely, your child is going to earn a small amount of money, however, allow them to see you obeying God’s Word and they will follow suite. They also need to learn to give beyond their tithes and to give of their time as well.
We live in an unstable economy, and who knows if it will improve by the time our children are adults. Help prepare them financially. Instill in them that money should be saved and spent wisely. Money can be a blessing if they learn how to use it responsibly. Of course there are those times when it is okay to splurge and I am not saying that they should never treat themselves, there are always exceptions. Most likely you are already preparing for their future by contributing to an education fund, or other type of savings account. You will most likely not ask them to buy school clothes or essentials. But give them the basic ABC’s of money so that they are preparing for a fruitful financial future.
Copyright © Chere Williams, Moms of Faith, All Rights Reserved
(Content added and edited by Lara Velez, Moms of Faith)
Great article…. I love your practical tips regarding exactly how to talk to our kids about money and the reminder that they are never too young to start learning. thanks!