By Lisa Phillips
The Parenting Center
Teaching children about money is a parent’s responsibility, but often we aren’t sure how to do it. Money is a source of stress for many people, and parents may inadvertently avoid discussions on this topic. But money management skills are necessary to develop into a self-sufficient adult. Here are some tips for raising financially savvy kids:
Start the discussion at an early age. Like many important issues, you will need to approach the subject more than once, and in different ways as your child grows. Even though money is an abstract concept for preschoolers, they can help you count and sort coins (with supervision), put loose change in a glass jar and watch it accumulate, and talk with you what you will do with the money when the jar is full.
Show children how to budget. Around age six or seven children can understand the concept of money well enough to begin an allowance. It’s important to be clear what your child’s financial responsibilities are; a young child might be expected to buy his own candy or treats with his allowance, but an older child or teen who receives a larger amount might be expected to purchase his own clothes. Children will sometimes spend their allowance impulsively, and may end up with "buyer’s remorse,” regretting some of their choices. This valuable lesson, however, is not effective if Mom or Dad frequently rescues a child from their own mistakes by giving them more money before the next allowance is due. Some parents use allowance to teach delayed gratification and charitable giving by insisting that children divide their allowance into three parts: a third for immediate spending; a third for saving for a long-term goal, such as college; and a third for donating to a cause or organization of the child’s choice.
Let children help the family save. Contributing to the family’s well being makes children feel valued and important. Even young children can help clip coupons and match them to the items in the store. An older child can help you figure out the best buy on certain items while shopping (a good math activity as well).
Communicate your values about money. Most parents’ favorite adage to repeat to their children about money is that "it doesn’t grow on trees!” But we need to go a little deeper than that. Teach young children to care for toys, clothes and property carefully because they are not always easily replaced. Rather than always tell children, "We can’t afford that,” consider explaining, "We are saving for some other things right now. We have to make choices.” This dialogue on how you make decisions about spending and saving can help guide your child’s future financial habits.
For more information on this topic, check out "Silver Spoon Kids” by Eileen Gallo, Ph.D. and Jon Gallo, J.D.