2. When you’re children are old enough, consider giving them an allowance in repayment for household chores. Let them know their allowance is directly affected by the completion of their chores. therefore, if they do one-third of their chores they receive one-third of their allowance. Some experts say start your child with fifty cents for each year of your child’s age. Some start with a dollar a year or more. Choose an amount that’s comfortable for your budget. Also, take into account what you will expect your child to pay for with her allowance. For example although I pay for my child’s school lunch, she is expected to use her allowance for ice cream day. Or if you pay for your child to go the movies every other week, let her know that you expect her to pay for herself and she needs to budget her money to do so.
3. Once your child receives an allowance their first instinct might be to blow it all at once. My suggestion is a set percent to save, gift, and spend. Try 15% to save 15% to gift and 70% to spend. As far as gifting, let your child decide where they would like to date their money. Let them chose a charity or a church or even a friend in need.Take your child to a bank or credit union to start their own saving account and don’t restrict them from making partial withdrawals. When saving for big ticket items say a 50.00 video game when your child’s allowance is 5.00 week can be daunting for a young child. Encourage your child to save half and match the other half. This way your child learns about saving and delayed gratification, without getting frustrated and turned off from saving all together.
4. There will inevitable come a time when your child asks to borrow money for an item. You can handle this a few ways. One is a flat out no. Some experts say teaching your child to say no to debt from early on will teach them to live within their means. Another way is to teach your children to make smart choices by learning to manage their debt smartly. If a child wants to borrow 5.00 for an item, let them know they will have to pay you 7.00 back. This teaches them about interest and encourages them to decide for themselves if the item is worth it.
5. Lastly when it comes to what kids spend their money on, try to take a step back and let them make their own choices and their own mistakes. You can advise but let the final decision be theirs. If a cheap item you advised against broke. he will learn about spending more on a quality item. If your daughter overspends on nail polish at the drugstore and then doesn’t have money for ice cream, she will learn to adjust her spending on her own. Allow them to make some $10.00 mistakes now may save them from making $1,000.00 mistakes later.
Have regular and honest conversations about finances with your children. Don’t make money a mystery. Most importantly if you are financially responsible, your children have a greater chance of being so also.