How to Teach Your Children About Money

By: Marjorie Burch

Once, When I was a child I asked my mother for a weekly allowance. I had it all planned out: she would give me money. And I would spend it on candy.

But my mother didn’t cooperate. “Eating candy every day isn’t good for you,” she explained. “And besides — there are better things to spend your money on.”

At the time, I thought my mother was wrong; I thought it’d be nice to have so much money that I could spend it on whatever I wanted.

But now I’m glad she did what she did — and not just for the sake of my teeth, either! Children who spend money foolishly often become adults who spend money foolishly. And while it’s possible to learn how to manage money as an adult, it’s much less painful to learn how as a child.

So how can we teach our children to use money responsibly? To be sure, what works in one family may not work in another. But here are some ideas that can help:

1. Teach them bow to work.

When children help with household chores, they learn to see themselves as valuable contributors to the family. They also learn that you won’t do for them what they can do for themselves. And developing reliability in this area will carry over into other areas of responsibility — including the way they handle money.

2. See to it they’ve money of their own.

You may give them a fixed amount as a part of the family budget; you may pay them wages for work performed around the house; or (with older children) you may encourage them to get a job outside the home.

However you do it, your children should have enough money so that they can plan and maintain a budget — one that includes giving, saving, and spending. An allowance that allows for little more than impulse buying won’t teach good spending habits.

3. Teach them how to save. Piggy banks are helpful for small children; a passbook savings account may be better for an older child; but having something special to save for will make saving money easier for any child.

Work with your children to select something that won’t take too long to get — not more, say, than a few months’ worth of savings. (You might even try matching contributions!) This will help them see that saving money can help them get what they want. It will also help them learn to work toward long-term goals — a necessary skill in money management.

4. Teach them how to give.

Even my two-year-old granddaughter is old enough to enjoy dropping her father’s church offering envelope into the collection plate. And every small child likes to bring an offering of their own to church. When they’re older, you may want to help them pick a special project or charity that they can support with regular, planned giving.

5. Teach them how to spend.

As soon as your children can manage, for instance, you should allow them to choose and pay for their own clothing. With a young child you might lay out three suitable outfits and allow the child to choose one. Older children might be allowed to pick their own school clothing, so long as they spent no more than whatever you’ve budgeted.

Other projects might include letting your children:

* compare grocery prices in newspaper ads. How much would it cost to buy the items on your grocery list at any given store?

* list favorite activities and compare costs — a day at the zoo versus a day at an amusement park, for instance.

* take the family out for dinner. This would include checking the phone book for restaurants, comparing prices, and estimating the cost of an evening out.

* record the cost of a family vacation. When it’s over, your child can report on the amount spent for food, gas, lodging, and other expenses.

6. Allow them to make mistakes. Be slow to offer unasked-for advice; be even more reluctant to say, “I told you so.” We all learn from our mistakes, if we are allowed to do so. (And learning from our mistakes is easier when we don’t have to defend them to somebody else!)

There are times, of course, that you may have to rescue your children — if they don’t have the clothing, for instance, to wear to an important event. But they won’t be learning how to manage money if they can get a “loan” from you every time they “must” have something.

Managing money is not a skill that can be learned overnight. Expect to spend some time at it with your children. (After all, most adults are still learning — or need to!)

But don’t be discouraged by mistakes. Hopefully, with time and patience on your part, your children will learn to spend money on better things than candy bars — or credit card interest.

(The above material appeared in the April 1992 issue of Signs of the Times.)

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