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Posts Tagged ‘money management’

by Rachel Paxton

A couple of nights ago we had some relatives over for dinner and they mentioned that they give their 7-yr-old son an allowance of $7 a week. At first I was really surprised that he was paid so much to do household chores. Then they explained what the money was for.

Their son was allowed to spend $3 of his allowance any way he chose. The other $4 he was saving to buy a car. A car! You might think what in the world is a 7-yr-old doing saving for a car. His dad said that when he was a teenager his parents told him that when he was old enough to work he would have to go get a job and then save the money to buy a car. He was frustrated that he had to find a way to get to work so he could earn the money to buy his car!

He decided that he wanted his son to be able to buy an inexpensive car before he went out to find his first job. He also wants his son to pay for the car. If he starts saving $4 a week now, he will have almost $2000 to buy a car when he is 15 years old! It’s amazing how saving so little can add up in time. It is a great lesson for kids to help them understand that if they really want something that they can save the money that they earned to buy it. Especially with cars, I think it is very important for them to contribute to the purchase of their car, the gas they use, and even their car insurance. We required our daughter to pay for her own gas and car insurance, and she really appreciated the work that went into making the money to pay for those things.

Of course it may not be a car you want your child to save for…that is just an idea. You may want your child to help save for college and/or give a tithe to your church. What your child does with his or her allowance is up to you and your child. Just don’t miss this opportunity to teach your child an important life lesson.

by Nicole Clemow

Children learn by watching adults. “Do as I say, not as I do” is an excuse for poor behavior. Ensure your child models good spending and saving habits from you as they will set the stage for good money sense in them.

How to be a smart consumer is a lesson your child needs to learn. Sit down together and discuss the concept of needs vs. wants. This can be more difficult that you think as defining the essentials can be complicated. Your child may consider video games a need, because at present they don’t have to worry about the necessities. Explain to your child that right now his or her basic needs are met by you. When they grow up, they will have to budget their money to make sure they can afford rent, mortgage, bills, etc.

Allow your children to participate in money discussions. Talk about budgeting, saving, planning for the future, and investing. Kids need to know that these are issues that they will be dealing with indirectly as a child (can we afford a vacation?) and directly as an adult (paying bills). This is a great time to explain budgeting.

If you consider making a major purchase and anticipate borrowing money to do this, include your child in the process and talk to them about debt. Credit cards seem very attractive to kids as they don’t see the possibility of mounting debt and high interest rates. Discuss the pros and cons of using credit cards and introduce bank loans into your conversation. Explain to your child how you decide to fund your purchase and why.

Show your child how you maintain a savings account and monitor your investments. Depending on their age, you may be able to teach them how to read bank statements and quarterly reports.

Charity and volunteering are great moral examples. They are also effective ways to show your child the benefits of giving money and time. Contributing to church, charitable organizations, or school functions are all great ways to model giving. Encourage your child to participate in giving as well. Saving change to donate to a hospital or charity that benefits sick or underprivileged children is usually appealing to a young person. They can relate to the issues faced by a peer and take pleasure in knowing that they are helping someone.

Set a good example for your children by discussing money issues and explaining your thought processes when considering purchases. This will encourage them to use this knowledge as they are faced with monetary decisions as a responsible adult.

Ways for kids to earn money is the most recent project for international author and speaker Nicole Clemow. In her search to find new ways for kids to earn money, she has written a ground breaking new book. Check it out here at http://www.waysforkidstoearnmoney.org for your free chapter and other bonuses.

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