If you’re a parent, you can probably remember the day your child was born. Remember your baby swaddled and passed around to grandparents and family members as they each gushed over what a miracle your baby is? Perhaps some even said, “Oh, he has your nose,” or “She is going to look beautiful like her Mom!” The truth is, your children will take a lot from you, and not just your good looks. But if you’re anything like 60% of Americans without an emergency savings fund, you may not want your financial wisdom to be one of those things they take after you!
Many parents wait to teach their children about financial management when they get their first job, before they go off to school, or when they get married. However, the best time to teach wise money management is long before your children make any money for themselves.
- EARNING an Allowance; Not GIVING an Allowance
From the time they are youngsters relying on you for just about everything, parents tend to condition their children towards a paradigm that there is such a thing as a “free lunch.” However, we know better. It is important that children learn the value of work and responsibility. This can be accomplished by setting aside extra chores or duties (outside of those regularly assigned) that children may perform and earn some sort of “allowance.”
The allowance your children earn doesn’t need to be a cash allowance. In fact, you’ll find other incentives that your children may find far more valuable than cash. Rewarding your toddler with a sweet treat for helping pair socks out of the laundry will teach the value of earning an income. Older children may value an outing with Mom or Dad in exchange for helping to weed the flower bed, mowing the lawn, or washing windows.
- Family Financial Game Night
Talking about your finances with your neighbor might be inappropriate or uncomfortable, but it shouldn’t be with your children. An occasional Family Game Night can be held using pretend money (Monopoly money). Deal each child an amount that is equal to the monthly household income.
Explain to your children all of the many budget items that exist for the household and ask children to give back and account for each of these items. As the children begin paying back the money that will be used for rent/mortgage, car, cell phones, food etc. the message will become abundantly clear where the family’s money comes from, and how far it goes.
According to experts, children who grasp these financial principles have a heightened sense of responsibility, and you may even experience a decline in the shouted exclamation, “Please! I want that, I want that!”
- Start Saving Towards Something
A popular study was performed with children being offered one small reward (often a marshmallow) immediately, or they could choose to wait 15 minutes for two small rewards. What the study found was that the children willing to wait for their reward tended to experience better life outcomes as measured by SAT scores, body-mass index, and other measures.
There are so many scenarios in which giving your children what they want, immediately, is by far the easiest option – but it may not be the right option. You can reverse the trend of instant gratification by starting a simple wish list of items, toys, or treats that your children, “want.” Then set up a savings tally or chart for each item that the children can work towards. You may even find that by the time the child has earned enough for the item, it is no longer of interest.
Do you have older children with summer jobs? Have your older children create a Free Mvelopes account and help them set up a budget of their own – your time invested will return dividends!
Once again, it is important that children develop a foundation of wise money-management principles that they will carry with them for the rest of their lives. Your children look to you for a majority of these life lessons. Perhaps the most impact-full lesson you could ever teach is not something you say, but something you do. Be an example to your children and show them the importance of saving for a rainy day, working hard, and remaining dedicated – they may just thank you some day.
Help us get creative, Mvelopes’ users! What are some of your parenting methods that help your kids learn the value of work and money?