Q. How can I teach my children, age 8 and 10, the value of money? They always want the latest toy advertised on TV or some novelty a friend has. I’ve tried to explain we can’t afford to get them everything they want but this doesn’t help. What do you suggest?
A. Teaching children about money is essential in today’s world of easy credit and constant commercials. We need to think consciously about what we want to teach and how to get these ideas across to our children.
Experts agree that the best way for children to learn about money is to have an allowance. They learn more from their mistakes, from spending foolishly, than they do from all the lectures or explanations we give.
Very young children, those under age 5, do not need an allowance but three or four year olds can learn to identify coins and can enjoy putting coins into a piggy bank.
Experts differ on whether or not allowances should be tied to chores. Some families give an allowance unconditionally. The child, as a member of the family is expected to help around the house just as everyone else. No one pays the parents to cook, clean, cut the grass - these are responsibilities. These parents don’t want their children to expect payment for everything they do. If chores aren’t done the allowance is still given.
Others believe it’s best to tie the allowance to chores so the child won’t think they can get something for nothing. Whichever approach is used, it’s ok to allow children to earn extra money by doing extra chores.
Give an allowance beginning in grade school. Talk this over with your child and explain your expectations about the use of the money and that it must last the entire week. For example, you may want your child to give a quarter every Sunday to the Sunday school offering. You may want to teach the child to save by requiring a quarter be put in a piggy bank. Young children should be free to spend most of their allowance as they wish. They will be learning to make decisions and they will be learning from their mistakes.
Don’t lecture, punish or blame a child for the way they spend their money. Instead, calmly explain that the child will have more to show for his money if he saves for a more expensive item.
By age ten children can begin to learn more complicated money issues. You can offer a loan (from you) for something the child needs or wants immediately. Explain this is how you buy your house and your car. Be strict about the repayment plan or your lesson won’t be effective.
Teenagers enjoy having their own clothing allowance. This will often help them get over the desire for expensive name brand clothing and mistakes will teach them a great deal.
Share with older children specific information about your own finances. Tell them about your own financial struggles or successes. Show them your budget and explain all the bills you must pay.
Even young children need to hear about how you decide to use your money. Why do you save? Give examples of saving for a large purchase. Why do you give to your church or to people in need? This is an opportunity to teach them to care about the needs of others. Sharing with your children your values and priorities about money will teach them how to save, spend and share their money.
“Train up a child in the way he should go, and when he is old he will not turn from it. “ Proverbs 22:6