Seven ways to teach kids about money

Author

Paul Banas

Submitted: 01.02.08

• Delay gratification – this is a key lesson for both parents and kids. If you can teach kids that rewards don’t always come right away, you teach skills for a lifetime.
• Be a good example – if you routinely buy yourself bright and shiny objects (that new iPhone!), don’t be surprised if your kids feel entitled to periodic gifts themselves “just because.” Big and small toys are nice, but try to send messages at the same time that they are rewards for working hard or for milestones achieved, not just to relieve boredom.
• Use your own life lessons to teach your kids – sure, kids tire of hearing that you walked five miles to school in the snow every day, but they do learn things out of your real life experience. My mother grew up during the depression and World War II, and her stories of doing without sunk in after many hearings. Stories about starving kids in Africa are somewhat removed, but your own sacrifices have more immediate value to your kids.
• Donate your time – Work a soup kitchen or build a house with Habitat for Humanity, but try to find an activity you can do with your family that shows the value of volunteerism, and that also introduces them to real people who have less than they do.
• Give an allowance. Make the allowance large enough for their age so that have real money to spend (for my daughter it’s been $1 from 5-8 years old without complaint). Let them spend it on anything they want – part of the lesson is that it is their money. Use the allowance money to teach them saving or to stop the whining in the store. They have money so are free to buy something if they really want it. Sites like ActiveAllowance.com can provide tools to manage allowances and chorelists. Some kids can relate to on-line or off-line accounting systems
• Make room for charity donations and big savings goals – when they are old enough, figure out ways to introduce other concepts into their savings. You might add $.25 a week to their allowance with the agreement that this saved money will go to the charity of their choice. Likewise, if they want a new bike, help them see the value of saving by giving them a goal to work for. The
  Learning Cents Bank is one tool to help them see how money can be divided between long and short-term goals, as well as to charity.
• Open a 529B plan for your kids’ education. Do it when they are small and invite family to contribute for the long-term benefits. These accounts grow tax-free during a child’s first eighteen years and are a good way to focus saving efforts early.

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