In today’s world where there’s a thin line between needs and wants, even adults find it really hard to manage their money. Most families today have many income sources and thus kids usually get whatever they ‘want’ sometimes even over and above their ‘needs’. So how can we teach our kids about leading a lifestyle that values money?
Here are a few tips:
Talk about earning money. Most lessons of life begin at home. And speaking with kids about how you earn money helps. Tell them where you work, what you do, how much you earn and how you can plan the expenses. Ah ha! No, not the real income, but a number that they can understand. “Mommy earns 100 Euros each month. Let’s see how we can spend it. We need to buy milk which is 2 Euros, Bread 2 Euros, Food 10 Euros – so how much do we have left?” This helps kids understand that there’s a limit to earning money, hence there’s a limit to spending money as well.
Talk about budgeting. Talk to kids about long term goals with money and how you save up. “Mommy likes the new phone, but we’re saving up for a new car, so the phone can wait.” This teaches kids to prioritize things that are important – basically differentiate between needs and wants. Tell them that after setting aside money for food, clothing, shelter and education, there’s actually quite little that we can put aside for buying our own house or car.
Give them an allowance. While I’m not a big fan of paying kids for mowing the lawn or doing the dishes, (because I believe these are chores that are to be done while you share a life in the same household), sometimes giving an allowance for helping you do ‘your’ work, helps. For instance, they add up something that you need for your work or for your taxes. Or if kids do your laundry (not theirs) and help put it away neatly. I also feel that once they have an allowance regularly, parents should cut off all extra luxuries except for fulfilling their needs. For instance, if my child had an allowance, I wouldn’t buy him that bag of candy at the grocery store. He needs to save up for this. And he needs to decide whether to buy candy or a new football with what he has saved up!
Encourage older children to get a job or a summer job. It’s important to let children experience how much hard work goes into earning those dollars. And working a summer job doesn’t just give them pocket money, but also teaches them other values like, discipline, consistency at work, working through challenges and more. You can even nudge kids to start saving up for their college fund. Of course, they can’t do it all by themselves, but at least they can do their share.
Money may not be the most important thing, but it affects everything that is important in our life. And starting kids off on the nuances of money management at an early age, helps them to build a good relationship with money in the long run.