How To Teach Children About Money
How to Teach Children About Money – Be Sure to Start Early
There are many opinions both pro and con regarding the issue of how to teach children about money. Many experts in child education recommend that you pay them an allowance and feel that by doing so, you will help to teach then to be financially responsible.
Another opinion from child development experts that appears to be just as strong, makes their case by stating that just the opposite is true. Now that we as parents are confused, and quite frankly don’t know who to believe, what do we do?
We can’t say who is right or wrong, because we as parents have an opinion as well, that may have been influenced by our upbringing. For the purpose of this article, we will present the opinion of the pro-allowance group and in a future article, those in opposition.
Before you begin to pay an allowance to a child, you need to be sure that they are old enough to count money, and in fact, can and do. Some basics should be explained to the child at the onset as to the types of expenses that the allowance would be used for.
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A very important point to cover at the onset is that he/she is expected to save a part of the allowance. It seems that opinions on how to teach children about money are quite plentiful. Should you tell your child that his/her allowance is payment for their performing various household chores? Tell us what you think.
Once again, the experts can’t agree on this issue either. Some say yes, while there are many others that say a child should be helping around the house or yard simply because a family member is expected to do this, and not for payment.
How about paying a young child, over and beyond their allowance, for certain jobs that you normally pay an outsider to perform? This would include jobs such as shoveling snow or washing the family auto. Is this how to teach children about money? But, where do you draw the line? Let me have your opinion on this.
How would you handle a child who has been receiving an allowance, who asks for a raise? There are many parents that object to paying an allowance for that very reason. Isn’t the paying of an allowance supposed to be a method to teach children about money? If so, then why not use it that way?
This might be a good opportunity to teach them about negotiating skills that they will need later in life. Many of us adults wish that we had been taught these skills as youngsters, especially when talking to our boss about a raise in pay.
Some questions to ask the child during the negotiation might be if the allowance now would be covering other expenditures and how much of the new raise would be put away in savings for long term.
More than likely, the most difficult decision will be how much of an allowance to pay. This can be affected by family income and plain common sense. You can be sure that your child will mention the amount that some of their friends receive (only the highest paid ones).
Some parents feel that paying their child an equivalent amount in current dollars that they received when they were the child’s age is fair. Perhaps it might be, as long as other comparisons are equal. This is a tough decision, and each parent will have varying opinions.
One thing that all of the experts do agree on, and that is to make savings a mandatory condition in how to teach children about money. We agree too.
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I also agree with you, the greatest lesson parents can teach their children is how to save their money or their allowances. I’m glad my parents taught me that. 🙂
By the way, great post Gust! Thanks for sharing this.
Thanks for your kind words Mark. Smart parents will begin teaching their children at an early age and when the child gets older, it becomes easier for him to start his own budget.
You’re welcome Gust! Totally agree with you with that. Do you have an email subscription in this website? I want to subscribe in this website thru email.. 🙂
That is being set up now, we had to change the old one. Will fire an email to you when ready.
This is one of the most important things for me. Just this weekend, our kids are running their first lemonade stand!
That’s great, Derek! Lemonade stands were definitely a staple of my own childhood. Budgeting, sales marketing, money management, and teamwork were all rolled into one by that summer classic. Good luck to your little ones; I hope they pull in some big bucks! 🙂
Our kids are expected to help around the house because they are part of our family. My wife and I don’t give an annual allowance for chores. However, if there is something one of our kids has their eye on, we will take that into consideration and more than often we will offer them extra duties, such as washing the car, to earn some spending money. This is what works best for us.
I agree that teaching kids to save some of their money is the big take-home message here. Regardless of how much the allowance is, saving should really be emphasized!
I have a 15-year-old daughter, and my husband and I pay her $50 every two weeks. We are by no means rich, but both of us do have good jobs. Our daughter does a lot of babysitting for her younger brother, especially during the summer, so we feel that the she earns every dollar we pay her.
It is really important to teach kids the importance of saving money, which is what I make sure I do with mine. I have seen some financial issues in my lifetime and want my kids to never see such a time in their lives.
Thanks for your comment Yolanda. Also very glad to hear that you’re already teaching your children about finances. It’s a very important topic that you will be challenged by all of your life in some way.
That’s what it’s all about, isn’t it? Giving our children the knowledge and opportunities that we ourselves didn’t have.
I am kind of torn on the issue, my son is 4 and you gave me some good advice to consider….he does help around the house a little bit at a time!
Nowadays, it’s important to teach our kids how to save money. The earlier they learn, the better. Otherwise, they’ll find it hard to value money as they grow older.