Why money lessons for kids? Karla Dennis and Associates, Inc. believes in financial literacy, and that starts at an early age. If you want successful children in the future, start early and now, by teaching them how money works. Many kids get an allowance-their first experience with earning money. Make sure to set a good example from the start by setting rules and teaching your children good financial habits that they can take with them into adulthood. Here are a few good tips to keep in mind:
Table of Contents
Money Lessons for kids #1: Learn to earn
The first and most important lesson is to teach your kids the value of a dollar. We have all heard that saying, “Money doesn’t grow on trees”, but if your child doesn’t understand where it comes from, they may not get this quote. Instead, have an active talk with them about how money works, and why you work and have a job. Make sure your kids clean their rooms, help with meals, wash dishes and/or perform other needed chores around the house so they make the connection between income and working for it. This is a great way of getting them to realize that spending is fun, but work is hard- so money goes faster than they may realize.
Money Lessons for kids #2:Do not withhold allowance as punishment
The only time your child should not receive an allowance is if they fail to complete assigned chores. If you withhold or reduce allowance for misbehavior at home or school, it only serves to teach them that they can “pay a price” for bad behavior. The best strategy is to be consistent with an established allowance arrangement so that your child learns consistency in earning a wage.
Money Lessons for kids #3: Allow kids to earn based on age
The question of how much money, is one that we see often. As a general guideline, parents can follow a simple rule: Pay your child weekly the equivalent of their age. If your child is 10, he/she will receive $10 per week. This is a great way for them to become familiar with their “income” and making sure that they budget and can plan ahead.
If you have multiple children, and feel nervous about setting apart money for your children, don’t fret. Instead, whenever you go to the store or they want ice cream or a toy, ask them if they have the money for it. By putting it in their hands, and not yours, they will get to see that spending money and buying treats all the time adds up. The money that you are giving your children as allowance should also be something you are consistent with and also strict with.
Extra Tip: Don’t give advances
As adults, it’s not often that employers give advances on wages, so don’t teach your kids that being paid before work is completed is okay. If your child blows through their allowance, hold strong and make them wait until the next “pay day.” This teaches them that they need to be more careful about how they spend and when. It’s a tough world out there, and the best way to learn is by giving them an authentic view of how getting paid works.
Final Tip: Teach your kids to save
Help your kids understand the importance of saving money. Help them set up a bank account and explain why it’s smart to have money for a “rainy day.” This may be the hardest step to teach, but a great way to start is by helping them realize that sometimes, great things cost a lot of money. Perhaps they’re really excited about a new toy. Soon, they will see how much time or work they need to get done in order to save enough money for said toy. This is a great way to show them how hard it is to save money, and they may even think twice about spending all their hard earned money on a toy.
Giving your child an allowance is a smart way to teach them a strong work ethic, the value of money and the importance of saving for the future. Starting off by teaching strong financial habits will better ensure your kids are financially responsible throughout life.