These kids on vacation carry their own backpacks -- hopefully with lunch inside. An upcoming vacation or holiday are excellent opportunities to teach kids how to save money.
While watching the Patriots yesterday, I took note of commercials because I rarely watch TV. “Aunt Sue, how do you know what to buy unless you watch TV?” my nephew asked dryly.
I don’t need to buy much. I might want to buy more than I need. Managing my emotions around my wants has been critical to money peace.
Spending less than you earn is a valuable life lesson that parents can teach kids from age five on.
Five year olds can learn to manage small amounts of money through a weekly allowance not tied to chores. Give her 50 cents and allow her to lose it, give it away, save it or spend it on whatever she wants. Introduce the idea of saving for a special occasion, such as an excursion, day trip or holiday.
When she gets in first grade, increase the allowance so she can choose whether to buy lunch a few days a week or make a brown bag lunch and save money. Put “allowance” on the family meeting agenda. Kids as young as 3 years old can participate in a 10 minute family meeting that includes compliments, new business, a snack and family fun. See my tip sheet on family meetings
Talk about how they can budget their allowance, plan, donate and save for special occasions. Don’t do it for them. Allow them to experience spending all of their money and your kind firm refusal to be a money machine. Unless you want to undermine their money management by showing them that you’ll always bail them out of financial problems, and they should be able to buy everything they want.
Award allowances without tying them to chores because they contribute to the family welfare, they also share in the benefits. If you bribe them , you’re teaching them to manipulate people with money, and to work for money.
According to research, money is the LOWEST form of motivation. Have you ever worked only for the money or had an employee only in it for the money? Both are bankrupt.
It takes time to learn to manage money and develop internal motivation to contribute to a family and society. Allowances teach children to manage small amounts of money with guidance, and to patronize yard sales.
By the time children are old enough to “want” things, they are old enough to earn money outside of the family by pet care, yard work, mother’s helper, lemonade stands and more creative ideas. I discourage the practice of paying kids to do special chores to earn money for special purchases.
Do not feel sorry for them! They can work outside of the family for what they want. Delayed gratification encourages the priceless lesson of self-discipline and avoids addiction to “stuff.”
My husband bought his third new car ever on Friday. The first new car was in 1981, the second — a work truck — was bought in 2005. Bob drove used cars while we paid for food and housing, shoes, braces, school trips, fun things, teen beater cars, and college education for our four children.
At the end of the day, it’s nice to have a new car that we could have lived without. One of the things I appreciate about him the most is his healthy and generous relationship to money. You can nurture this in your children by your example, encouraging them to live within their means, and setting kind and firm limits.
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Tags: Encouragement, family meetings, money and kids
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