Kids need to learn the value of a dollar. Money doesn’t grow on trees. If parents don’t teach kids how to manage their money, who will? But what do kids need to know? Check out these five thoughts on how to teach kids about managing money.
Play Monopoly together as a family. As you do, talk about unexpected expenses (like you have when you draw a Chance or Community Chest and in real life). Talk about how you have to save up to buy a house, how you have to pay rent, and how mortgaging a property limits you. Talk about what happens when you spend all your money but the bills keep coming. Have fun, but make the game a series of teachable moments.
Give your kids an allowance each month instead of each week. Set clear guidelines about what expenses you will cover as part of raising them — family meals, housing, utilities, clothes, etc — and which expenses they have to cover. Make them do chores to earn the allowance in preparation for adulthood when you have to work to make money. They may be responsible for covering the costs of their entertainment with friends, for specific clothing items (like those name brand hightops), for toys, for video games, for gifts for friends’ birthdays, etc. By giving them the allowance for a month instead of weekly, you force them to pace themselves in their spending and to plan ahead.
Giving the kids an allowance is the first step to teaching them about budgeting. Give them some guidance by sharing the family budget with them, too, so they can see that every dime is accounted for. Practice what you teach. Is the family saving up to go to DisneyWorld? Show the kids the saving plan and ask for their input in where everybody can cut back to earmark more money for the vacation.
No credit; save to buy
A friend’s son texted him asking permission to buy a video game that cost $30. When the dad asked the son if he had $30, the son said, “No. I only have five, but I’ll pay you back when I get my allowance.” My friend explained that’s not how it works. To buy something, you have to have the money. It’s a lesson in saving up to buy something instead of buying on credit. Could the dad have loaned the money to his son? Sure, but instead he took the opportunity to teach his son a lesson in money management as well as delayed gratification.
Fix it instead of replacing it
How do you respond when something in your home breaks? Do your kids see you throw it away and buy a new one, or do they see you work to repair what you already have? Often repairs cost less than replacements, and the repair process teaches your kids to take care of their belongings. Additionally, repairing things help kids understand perseverance and teach them not to be wasteful. So, teach your children how to sew on a button, hem a seam, maintain a car, and not buy more groceries than the family can eat before they expire.