Money-Smart Kids: How To Teach Children Good Money Habits

By Garima Midha

In today’s world, when parents want to make the most of the time they have with their children, how does one teach them to appreciate money? In the few hours we get at the end of a work day, we really feel like pampering them – the last thing we want is to say no.

Of course, we want to give our kids much more than what we received growing up – many of us come from ears of hand-me-downs, no pocket money and gifts only on birthdays. Today, that is amply compensated for by weekly shopping sprees, a gift every time someone steps into our house and a fulfilled demand every day.

So, how to we draw the line? How do we strike a balance between giving our kids the moon and the stars and their appreciation of monetary value? Catch them young as all good habits have their roots in the early years. Here are some effective ways of making your child money wise.

Limit Their Choices

Do not shower your child with gifts, toys and books. Ration them out. Even adults cannot read two books at a time – how will a child do it? Let them enjoy each new possession completely. If you have got your child a jigsaw, let him play with it till he has solved it – only then should you give him another puzzle.

As soon as a child gets a new toy, the older one lose their charm. Keep this in mind. For example parents buy multiple ride-ons for their children because there is a wide variety available. A better way would be to buy one on every birthday and allow your child to get attached to it.

Give Them An Allowance

Fix a monthly allowance, to be handed over on the same date every month. Cast that day in stone and ensure you always have the correct amount in a nice little envelope ready for your child.

In this way, the child will look forward to pocket money day and appreciate the whole ritual more. Do not merely hand over couple of notes to the child – show some respect for the money, and ask for an account of the last month’s handout before you give the new one.

Teach them to maintain accounts that detail how much and when the money was spent. Your children will become more accountable, and you’ll be able to keep tabs on their spending habits.

Pay Them For Chores

If you don’t believe in giving kids an allowance, you could even pay them for chores done, like mowing the lawn, walking the dog or running errands. That way you can teach them the value of working for cash and the dignity of labor.

If they need money over and above their pocket money, your kids should be able to justify the expense to you. If you are not sure what to do, “I’ll think about it” is the best response. Buy some time and ponder over the matter – but once you come to a decision, stick to it.

Give your child a shopping budget and let her plan her own shopping list

Encourage Them To Save Money

Encourage the saving habit in your children. The best way is provide them various incentives and options – for example you can double the money they have saved at the end of the month. Alternatively, their annual hike can be based on how much they have saved during the year.

Another interesting option is asking them for a wish-list of five items in the order of priority. Depending on how much they save, they can qualify for a ‘luxury’ item at the end of the year, or on their birthday. The old ‘carrot-and-stick’ policy works well in making the saving process more appealing.

Give Them A Shopping Budget

A friend of mine devised a great method to regulate her daughter’s demands on shopping sprees. Before leaving home, she hands her daughter a sum of money (say, 50 rupees) and her daughter is allowed to buy whatever she wants within this budget.

With a limited budget, her daughter now conducts her own personal market survey and makes some pretty mature and well-researched purchase decisions. Her mother is saved the agony of dealing with tantrums over her child’s endless demands.

The child, in turn, appreciates the sense of spending her money well. Seeing the child asking her mother in advance which shops they will be visiting – and planning her own shopping list accordingly – is amusing and inspiring!

Be A Good Role Model

Above all, parents must be good role models to their children – you can only teach values that you adhere to yourself. You may fix pocket money and teach your child to appreciate his possessions, but your own financial patterns and spending behavior must correspond with these.

Practice what you preach – do not be a spendthrift yourself and appreciate money even if it is available in surplus. Money makes the world go round, and your children should know at an early age that a lot of hard work goes into the monthly pay check. Hopefully you’ll think twice before you pull out your wallet to appease your child again.

This article may be reproduced with attribution to http://www.lovingyourchild.com

Discuss this article with our parenting community on Facebook and Twitter.

Money Resources For Kids:

• “The Prosperous Teen” Home Study Program – Do you want to teach your teens money smarts and not sure how or where to start? Published author Patti Handy’s DVD program, The Prosperous Teen, is the ultimate 10 hour Money School for your home. She teaches teens how to manage their hard earned money, how to stay out of credit card debt, how to keep track of where it’s all going, the importance of a savings plan, understanding their investment options and so much more.
• Allowance Secrets – Offering money as an incentive for good behavior won’t earn you respect. Teach kids to earn their own money and budgeting will become a natural talent.
• The 9-Week HomeSchool Entrepreneur Course – The first course of it’s kind to teach your teen not only how to start a business, but how to recognize opportunities in the marketplace AND develop an entrepreneurial mind. Teach your teen the basics of entrepreneurship so they can start a business, and earn high school credit.
• Financial Wisdom Coloring Book – The perfect financial primer and activity book for kids ages 3-10. The left side is written to help the parents explain the important financial principle on the right which the kids are coloring.

Photo source LilGoldWmn

Copyright secured by Digiprove © 2011 SEO & More