Parenting Tips: Teaching Children About Money

By providing your child with a weekly allowance, you are able to teach children about money.

It's a fact of life. Your child will either ask you to buy him something or he will ask you for the money so he can buy it himself. Either way, the money has to come from your pocket.

There are three options in this instance:

· you can constantly hand out money, as though your pocket automatically replenishes itself

· you can continually saying 'no' because you want your child to respect the fact that money doesn't grow on trees

· you can provide you child with a weekly allowance, teach him the basics about money management and let him purchase what he can afford within his resources

Some parents feel an allowance should be tied with household responsibilities. Others feel that a child should be given an allowance regardless of what is accomplished at home. The choice is yours.

Whichever road you choose to travel, it is important to discuss the purpose of the monetary pay with your child. Explain why you feel your child is entitled to this weekly allowance and what, if anything, you expect in return. If you are tying any conditions and consequences to this allowance, make them clear to your child at the beginning.

Teach you child early on about managing his money. Initiate a savings/spending plan and discuss its advantages. The better informed the child is the easier it is for him to make decisions.

Suggest or demand that a percentage of his weekly allowance be placed in a savings account for larger purchases (such as the snowboard he has been begging for). Allow a portion of the weekly allowance to be spent as your child wishes. If the child is to be responsible, he must be allowed to make certain decisions regarding his funds. Some of these decisions may not make you happy!

This is sometimes difficult to watch. If your child spontaneously purchases a bag of candy with his allowable spending money and the following day he sees something else he would like, that is too bad. Once he spends his money, there is no turning back. This will undoubtedly happen, but it is a lesson in money management. How often have we purchased something, only to discover that we could have used that money towards a more realistic purchase? Probably more times than we wish to admit to. These experiences help us develop a respect towards money management.

Instead of encouraging your child to use the entire portion of allowance, why not suggest he save all or dome of it, to be placed towards a desirable item that does not require as much savings as that snow board. For example, your child wants a large package of trading cards. The price is equivalent to three weeks of allowable spending allowance.

This is an opportune time to teach him about delayed gratification. If he has to wait a couple of weeks before making his purchase, he is going to appreciate it much more.

There is nothing wrong with allowing your child to pay for certain items. If he purchases his own school bag at the beginning of the year, don't you think he will take better care of it? On the other side of the coin, if he loses his lunch bag, again this year, he will have to purchase a replacement. He will probably be more cautious with his possessions, if he knows that he will have to use his money to replace lost items.

If your child wants to buy his lunch at school, more frequently that you are willing to pay for, allow him to use his weekly spending allowance.

On the same note, if you child wants a particular item, we'll say a pair of expensive jeans, offer to pay for half. If he wants them bad enough he will have to use his own money. This money could be taken from his savings account (if he has saved money). This could be an issue that is discussed at the inception of the allowance.

Children need to learn that they cannot and will not receive everything they want, when they want it. This fact of life is best taught at a young age. If a child grows up being given everything his heart desires, he will not appreciate the fact that these items had to be earned, that they cost someone money and that they are to be taken care of and appreciated.

© High Speed Ventures 2010