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Teach kids money lessons
As parents, we have a responsibility to teach our children to be responsible with money, learning to distinguish wants from needs and to understand the importance of saving and budgeting.
The best way for kids to learn, experts agree, is for them to have money they have to manage on their own, but as parents, it can be tough to decide when to start, how much to give and how to present the facts to our children.
An allowance is an excellent tool for learning good money management principles. In turn, one of the best ways for kids to learn is by making mistakes and facing the consequences of their decisions.
A common expert view is to give kids $1 per year of age every week, but you may want to base the amount on what you expect or require your children to do with their money.
Once you decide on an amount, set parameters but keep the reins loose — one of the best teachers is failure and in safe surroundings, it’s OK for kids to learn the hard way.
If your child spends all of her lunch money on toys and has to pack a lunch for a few weeks, it’s a good learning experience.
There are a number of useful references online at kidsmoney.org/allart.htm and bankrate.com/brm/news/pf/20070206allowancechildagea1.asp to help you determine amounts and parameters.
When deciding how you want kids to use their money, consider that experts agree allowance should not be contingent upon good behavior or chore completion.
If your child sees less value in cleaning the bathroom than you do — which is certainly likely in my house — you will have another battle on your hands. Better consequences for failing to complete chores may be a loss of privileges.
Children need to learn about cooperation and the responsibilities of being part of a family, according to Aletha Solter, developmental psychologist and founder of The Aware Parenting Institute in Goleta, Calif.
And it’s never too early to start. Another point of agreement among experts is if your kids can tell you they want something, they’re old enough to start the process.
By 5 or 6, most children are able to understand the differences between spending, savings and donating. As they get older, they can begin buying gifts and personal items, said Lynne Ticknor, contributor at Bankrate.com.
She said many teens are capable of managing a clothing allowance to cover what covers them for the year.
For a good overview of children and financial literacy, check out bankrate.com/brm/news/financial-literacy/Oct06childrenfinancialliteracya1.asp?prodtype=pfin.
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