Tuesday 6 August 2013
Teaching Kids About Money
'When a friend announced dramatically that she was taking on a second job and would be working 7 days a week I confessed that I would prefer to stay in the debt we're in then work that often. I've done the Mon-Fri evening thing and it was hard to be away from my husband every night. It most certainly put a strain on our relationship and made it hard to do anything. I also cut back on a lot of expenses that she has - satellite, diapers (I use cloth), only owning one vehicle, and activities for the kids.
Everyone's way of life is different and I admit that with my upcoming "get out of debt" move I do have a bit of an unfair bias. There was just one point she made - that they needed to be out of debt so they teach their kids proper money management and don't wind up in debt later in life like her parents. I don't believe those two are mutually exclusive. My parents were in debt, I have a good understanding of money, and my mother just turned 50 very close to being debt free.
I am teaching my kids about money. Here's how:
1. Give the kids an allowance.
We do $1 for every year of age. Yes that means my 5 year old gets $5 per week.
2. Don't tie money to chores... Exclusively.
The children have chores they're expected to do. If they complete those tasks they're allows to do bonus paid chores. The hope is to teach them working harder then what's expected gives positive results. Hopefully this turns into jobs later.
3. Force them to save up.
I love to buy my kids whatever they want, but now that they have their own money I'm making them save for any toys they want. Waiting also helps them consider their purchases more carefully.
4. Reminding them why mom says no.
When I say no to the kids I remind them why - we need that money to buy food and we're saving for a trip to Disneyland. It reminds them that we have to prioritize. I never tell them we can't afford things because I don't want them to think we're poor or that we don't have enough money. We have enough for everything we need, not everything we want.
5. Show them value and cost.
Now that my oldest is understanding numeracy better I can say "that shirt is $20, that's too expensive." Or "That shirt is only $6 and comes with a hat, what a great deal.". I am also teaching them to shop second hand and explaining how much money we save there. We're fighting the "new is better" mentality too.
6. Keep the conversation going.
We're always talking about money and good uses of it. We point out cost, why we work, and the things that cost money. When they get older we will go into more detail. At 14 my mom sat me down to explain how mortgages and CMHC work.
Yesterday my 5 year old told me her tea party would have lots of guests because it was free.
Look how much my kids got for Christmas this year!
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