Teaching kids about money management can be a tough job. My five-year-old is in a “give me” phase — he sees a toy he likes, and he wants it given to him NOW. We’re still working on understanding the value of a penny versus a quarter, so it’s challenging to help him understand what $20 means too.
So, a few months ago, we decided to give him an allowance. I realize there are many opinions about whether allowance money should be tied to tasks. For our family, and for his learning, we decided to pay $1 per week for the completion of his daily chores. These jobs include making his bed, setting the table for dinner, and once a week cleaning up the playroom (and a billion LEGOs). He is also expected to help out with various other tasks around the house as needed. Those jobs are just part of being in our family and don’t count as allowance responsibilities. I don’t keep a chart; he seems to do fine with knowing these jobs need to be done most days of the week.
And guess what? Ever since he started saving up his money, he’s beginning to understand its value. I hardly ever hear him demanding to bring new toys home from the store when we’re out and about. Instead, it’s given us a bunch of opportunities to discuss how much things cost. We talk about saving up for things we want, instead of buying something less desirable now just because we can afford it. The day he saved up enough money to buy an Iron Man LEGO set with his money was a BIG DEAL and an exciting time around here.
This allowance system has been a great way to introduce him to the value of money and I hope it opens the door to many conversations down the road — spending versus saving, credit, interest, budgeting, etc.
Help For Teaching Money Management for Kids
If you’re serious about teaching money management at your house too, there’s a new book coming out that might help: The Abundance Code: Busting The Seven Money Myths For A Rich Life Now. Available in September, this book discusses ways to build financial success for adults and kids. Author Julie Ann Cairns recommends starting early to help your kids be receptive to opportunities for creating abundance. Cairns suggests:
- Discuss concepts of financial lack and scarcity, but balance them with stories of hope and progress.
- Talk with your kids about technological advances throughout the world, and how they can bring abundance worldwide. Magazines like Discover and Scientific American have lots of examples.
- If your children want a big ticket item, brainstorm with them about different ways to earn the money or access the item instead of saying “We can’t afford that.”
- Encourage kids to be generous and giving, to make our interconnected ecosystem — and our own lives — better.
What tips do you have for teaching kids about money management?