Kids
are great, aren't they? Parenting is tough sometimes, but the rewards that pop
up unexpectedly make the parenting challenges seem worth it all. As parents, most
of us want to provide our children with a strong foundation of values and knowledge.
It is our responsibility as parents to include in that foundation the teachings
of how to manage money responsibly.
Children
are now taught in preschool about computers and their use. If they are able to
grasp the concept of computer technology, they probably can grasp the concept
of money. Preschool age children are generally the best age to begin teaching.
The
most popular method of introducing money management to kids is to give them an
allowance. You should determine the amount that best works for your family. One
example is to give children one dollar for each year of their life as their weekly
allowance, so at age 3, a child would receive $3 per week. You might want to consider
giving the allowance in coins rather than dollars and assist them in learning
how to count their money at the same time. Introduce the different coins to them
as they learn each one.
You should develop
a very simple plan for your children's money using the concept of immediate spending,
short-term goals and long-term goals. For example, you may want to separate the
children's money each week into thirds using jars or clear containers: One-third
goes into the "spending jar" (which can be spent immediately on anything),
one-third goes into the "short-term savings jar" (to be saved for larger
purchases that the child wants) and one-third goes into the "long-term savings
jar" (to be put into the bank). The children will be able to see the money
add up and plan some of their own purchases.
You
can also teach young children about money by letting them earn some extra money.
This is above their allowance. You can allow them to earn money by doing extra
chores around the house or for neighbors. You should add this money to their savings
jar.
Assist your children with a simple
budget/savings plan. Help your children make a list of the things they want to
purchase with their money. Prioritize the list. Help them cut out pictures of
the items they want to buy to tape onto the list. Tape the list to the outside
of the money jar as a visual reminder of why they are saving. As your children
see more things they want, help them add to the list and reprioritize. Try to
help them aim for purchases they can obtain within 3 to 6 weeks so they do not
lose interest.
At some point, you will
want to open a savings account at a bank for your children. You might want to
do this to coincide with the time they are able to print their own name. Allow
them to "sign" the bank paperwork when opening the account so they feel
a part of the process and recognize it is their account. Periodically, have them
take their long-term savings jar to the bank to add to their savings account.
Congratulate them when they add to their savings account balance.
Young
children can learn a lot about money from playing math/money related games. Look
for educational software or board games. There are also books available that deal
with money. One book for young children is "Alexander, Who Used to Be Rich
Last Sunday," written by Judith Viorst. Another book that tells children
everything they could ever want to know about money is "The Kid's Money Book,"
written by Neale S. Godfrey. There is a great children's web site that has information
about money, banks, checking accounts and ATMs at www.kidsbank.com.
While
using these examples to begin teaching your children about money, be sure to remember
the most important thing you can do is to set a good example. The second most
important rule is to keep it SIMPLE and FUN.
As
your preschool-age children grow, continue with the children's budget and goals
making adjustments that are age appropriate. With teenagers you may want to consider
giving them 1/12 of their clothing budget each month and allow them to manage
the money through using their budget and goals. The key is to continue throughout
their life to teach them about being financially responsible. You will reap the
rewards as parents! For more information regarding this topic or any other tax-related issue, please call The Henssler Financial Group Tax & Accounting Division at 770-428-4025.
