Like any family issue, instilling financial savvy in your kids is no simple task. It requires patience, practice and responsibility, none of which are either demonstrated by parents or picked up by kids very easily.
The problem when you have a young family is not only that our advertising culture creates needs with reckless abandon, but also that their friends seem to have every toy, game and gadget and Pokemon card ever produced. But the task is there before us. Financial planning and the rewards it brings are second nature to an adult who was taught the basics of financial responsibility at an early age. Parents need to begin instilling this sense of financial responsibility as early as possible in their children. Here are a few methods you may find useful in helping your children develop sound financial skills.
Pay Your Children for Special Jobs
Try to create a distinction between regular household chores, for which there is no pay, and special tasks that require some additional incentive and motivation. Straightening up your room and taking out the trash is expected of them. Washing the car and helping trim the hedges are jobs that deserve compensation.
Price Jobs According to Degree of Difficulty
The harder the job, the higher the pay. Shoveling the driveway might make a six year-old five bucks. Bringing a few boxes up to the attic might fetch fifty cents. Perhaps a chart can go up on the fridge listing a range of chores with corresponding pay rates.
Make Them Aware of What Things Cost
If they want a certain item that costs $50, make sure they understand that they’re talking about an entire day’s work at a minimum wage job. The prospect of a full day of heavy yard work might just make them re-evaluate how much they want that particular item.
Require Them to Pay Half
If a child wants a big-ticket item, make them come up with half the amount. This will counteract any tendency toward immediate gratification, and help them understand the relationship between work and reward.
Convert Dollars into Higher Denominations
Few things give my five year-old son more pleasure than trooping down to the bank with an assortment of ones, fives, tens and twenties, and converting them into a nice crisp Ulysses S. Grant. It instantly creates the desire for a C-note.
Have Them Open a Bank Account
Most banks will open an account with as little as $10. Paying attention to the running total is a great way to instill a desire to save.
Give Them an Allowance
A good guideline is to give fifty cents a week for each year of age your child is i.e., three dollars per week for a six year-old, four for an eight year-old. (Four year-olds have no concept for the value of money. Their treasure is in things, like bird's eggs and snail shells.)
Have Them Spend Their Own Money
When buying gifts for family or friends, have the kids part with their own money. This builds in them a sense of generosity and self-sacrifice.
Encourage Them to Donate Their Own Things to Local Charities
Bring your kids to a nearby children’s hospital or family shelter and ask them to offer a favorite toy or article of clothing to one of the children there. This practice can help us build a better future for our society.
Choosing from among these suggestions will help start your child down the lifelong road to financial responsibility. They might also help build a little character in your kids, and save you some money at the same time.