As the credit crunch deepens and our pockets become lighter, numerous families will be looking for ways to stretch the pennies and for families with children, this maybe an appropriate time in which to educate them on the importance of money and how to handle it wisely.
Do not allow the fact that you have not made good financial decisions in the past, prevent you from teaching your children good financial management. You maybe going through a financial crisis right now and although it may not be pleasant, you will be learning valuable lessons about yourself and money while at the same time instilling those good lessons learned to your children.
Be honest with your children about the money situation in the household. Tell them as much as they can understand without overwhelming them. Children are more perceptive than you think and will appreciate not being kept in the dark. They are also more creative and perhaps can see ways of improving and increasing the family budget.
When it comes to giving allowances give according to age and family income. Talk about the need to save, spend and give. Encourage the children to pay themselves first and save a portion of their allowance. A portion should then be set aside for tithing or charity and a portion to spend.
Money earned is money valued and the best way to impress this upon children is to have them earn extra by doing non routine jobs around the home. Please note that the allowance is not payment or bribery for doing what is expected of them. Every child is required to take an active part in household duties simply because they are part of the family and shouldn’t presume payment for everything they do.
Involve the children in meetings regarding finances. Set a financial goal and find ways of achieving it. Say for example the annual holiday, decide where you would like to go as a family and devise ways of funding this. Give each child responsibility for looking into the cost of transport, flights, accommodation, food etc. They may offer suggestions or even decide to take on a job. Help them draw up a list of suitable jobs they can do. Mowing lawns, washing cars, a paper route and babysitting are all jobs that will earn them a few coins and who knows what might spark the entrepreneurial giant within them. Many millionaires started out this way and your child could well be one of them.
Once they start earning open a bank account or savings account for them. Take them shopping with you and permit them to buy what they want with their own money. Children feel powerful once they have their own money. They will soon come to realize that money doesn’t grow on trees and may even display a certain amount of thriftiness in relation to this.
Play money games with them such as monopoly and take them grocery shopping to see how and what you buy. Only by imparting a healthy respect for money early on in life can they avoid the frivolous ‘spend now and pay later’ attitude that has become so prevalent in society today.