imconfident

I sincerely believe that it is far more beneficial and far less costly to help a child build confidence than it is to fix an adult who has little or none.

Are your children money-wise?

on March 8, 2013

Many children are not taught how to manage money properly and they grow up to be adults who make poor financial decisions.  Today millions of people are deep in debt, owing money to credit cards, having problems paying their bills and experiencing relationship issues because of their financial difficulty.  I was checking into stats on people declaring bankruptcy and it is estimated that over 1.5 million people declared bankruptcy in the year 2011 in the United States alone.

Society continually teaches us that we need more and we should spend more.   It doesn’t matter if we have enough money to buy something – just buy it anyway and use your credit card!   Sure, it’s great when you get that new TV or take that vacation now, but when you start making those monthly payments plus interest, you can soon lose that initial excitement.  It isn’t fun paying for all those Christmas presents you bought last year or that expensive vacation that you took 2 years ago.man put money in piggy bank

Children need to learn at a very young age how to manage money.   Giving your children an allowance is a good way to help them learn about money ONLY if you are using it as a learning tool.  Just handing them money to spend on whatever they want is not really teaching them to be responsible.  Help them figure out what to do with their allowance by dividing it into 3 different areas:

  • some should be spent on things they want or need
  • some should be saved for the future – putting this in a bank account is a good idea (can save for a special item, a trip, an event)
  • some should be given (offering at church, donation to a charity)

Giving an allowance should be part of having your children doing chores.  They should be given age-appropriate chores and always receive appreciation for helping so they feel that they are an important part of the family.

I’ve also read about the idea of paying your children for doing their chores.  This can be effective for older children and teens.  It also prepares them for entering the working world.  A dollar amount can be put on a job and when completed, payment is made.  It the work is not done, no payment is made.  You can also use a combination of allowance and payment.  Children are all different and they respond in different ways, so determine what is the best method.

As children get older, talk to them about credit cards and how to use them properly.  Be a good example with how you spend your own money so your children can learn from you and follow your example.

I have a friend who has a young son that doesn’t understand the concept of money and when he wants something, he will have temper tantrum if he doesn’t get it.  When we go to the mall and he gives him a ride on the horse or boat, he cries for another ride and his dad gives in.  Then he cries for another ride.  Last time I gave his son a dollar and told him he could pick out one ride and that was all he could have.  He picked out the shiny blue car, put the money in and while he was on the ride, his dad said that he would cry for another ride.  His son got off and he didn’t cry at all because he had used the money and he knew there was no more.  Children are very smart but they will push their parents if they are not given specific guidelines to follow.

When shopping with your children, give them a set amount of money to buy their own clothes or even groceries.   If you buy them yourself, they can’t figure out what the items cost and they don’t see the money, so they have no idea what is being spent and they don’t care.  If you let them hold the money and help them figure out the costs, they will begin to understand the value of money.    When you are buying your child a new outfit for school and you are planning to spend about $100 – give the money to your child and go shopping with them.   Let them pick the store and the items they want.  If they have chosen an expensive shop where they will spend the entire amount on just one pair of pants or shoes, suggest that they look at a discount store where they might be able to buy more items for the same price.  When you are shopping for groceries, give your child some money for snacks and let them pick up what they want.   Don’t offer to give them more money, tell them they must keep the items within the amount they have been given.  This will set a great example for their future shopping trips.

Helping children manage their money by making confident choices will help them build their esteem and they will have a much better chance at becoming a financially responsible adult.

 

 

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2 responses to “Are your children money-wise?

  1. […] Are your children money-wise? (imconfident.wordpress.com) […]

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