When I was growing up, my sister and I were given an allowance for doing chores. When we had saved up enough, we sat down with our stepmom to decide what to do with the money. I would love to say that we were totally selfless and gave it all away to charity. The truth is, that’s not what happened.
Our parents did feel it was important to talk about how the money ought to be spent. Meaning: Don’t spend it all on candy! Yet, the lesson they taught us was a little more meaningful. Whatever we bought needed to have value that would last a while.
The point is, teaching kids to budget and save is very important. Saving up for a coveted item is a skill. There is so much temptation to spend any money you get immediately. There are a lot of adults that still don’t know how to save. Even the government is in trouble; just look at the national debt. It is staggering.
So, start teaching kids about money at a young age. Don’t wait until they are in college and saddled with massive student loans and credit cards that charge 29 percent interest rates. University campuses are hotbeds for shady credit card vendors.
What can you do to teach kids the value of a dollar? Start by offering incentives for chores. It doesn’t necessarily have to be “paid” for with money. They can earn television or computer time. They can also work to earn a trip to the amusement park or water slides. There has to be a way of tracking or charting progress with an end goal in mind. A popular method is a star chart in which kids earn a star sticker for doing chores, brushing their teeth, feeding or walking pets, etc. These can be tailored to different age groups. Or, with older kids, go high tech and use an app to track progress.
Talk with kids about things they want versus what they need. Do they really need a thousand Pokemon cards? Give children some autonomy to choose what they want, but discuss the reasons for their choice and whether it will be something that lasts. Try not to let them end up with something that will just end up on the bedroom floor in a day or two.
Of course, age matters. You are not going to let a two-year-old spend money. Wait until kids are at an age to understand what it means to earn, save and spend wisely. One option is to get kids a piggy bank in which they can “deposit” a certain percentage of money for saving.
Also, show them how you do it. If you take a trip to Target, for example, show them how layaway works. Put an item on layaway, show how you save up for it, and demonstrate when you can come get it and pay for it. The more kids learn about money, the better.
Lastly, give some to charity. Don’t do what I did. Give kids a list, and let them pick out one which “speaks to them.” Then donate a small portion of their earnings to the group they choose. It feels good to give.