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If you’re a parent, you are probably eager to find ways to teach your children how to be wise with money without feeling like you are nagging or lecturing them. Spoiling your children or not teaching them money management can wreak havoc down the road — and into their adult lives.
A 2011 Today Parenting survey found that three-quarters of respondents think children are spoiled. Don’t be part of the 75 percent. Here are 30 strategies for raising children who will grow up with a realistic and healthy perspective on money.
1. DON’T BUY YOUR CHILDREN THINGS TO APPEASE BAD BEHAVIOR.
Buying a screaming child a candy bar or trinket in a store can be tempting. The purchase is nominal, and the reward is quick — the child will calm down. However, these quick fixes can be detrimental in the long term because they teach children that misbehaving and making noise gives them what they want.
Do: Teach children good behavior and patience. Sometimes recognize these actions with a treat or reward. 2. DON’T GIVE AN ALLOWANCE WITHOUT REQUIRING THAT IT BE EARNED.
Consider the difference between an allowance that is given no matter what versus an allowance that is earned once chores or duties are completed. The latter can help children avoid developing a sense of entitlement.
When they were about 7 or 8 years old, her children started doing chores to earn an allowance, said Janet M. Nast, of Murrieta, Calif. “This was the age they started asking for extra things in the store. As a single mom for 14 years, I had to say ‘no’ or work out another plan. So chores it was. They earned 25 cents per task completed.
“When they saw something they wanted, we talked about how many chores had to be completed in a week to earn that item,” she said.
Tell children how and why they will receive an allowance. Do: 3. DON’T OVERLOOK THE VALUE OF A FINANCIAL EDUCATION COURSE.
Families should take financial education courses such as the Dave Ramsey Financial Peace University classes. “They also have (programs) for teens,” said Karen Robertson, of Wildomar, Calif. She is the mother of two grown adults and has a 16-year old grandson who has gone through the teen program twice.
Do: Research financial courses and enroll your children in one. Then discuss what they learned and how they will apply the information. 4. DON’T FAIL TO TEACH CHILDREN WHAT LIFE COSTS.
When shopping for groceries, bring your child along and explain why you chose one item over another — for example, cost per ounce or quality — said Commie Stevens, of Laguna Niguel, Calif., a mother to two daughters, ages 12 and 14. “Or play the bill game. See who can guess how much the family spends on electricity, food or gas. Don’t be surprised if your 12-year-old thinks electricity costs $900/month!”
Do: Discuss costs for necessities with your children. 5. DON’T FAIL TO TEACH CHILDREN WHAT MONEY IS AND WHAT IT CAN DO.
Children must first understand money as a chain of transactions, said Patrick Mulvey, of Long Valley, N.J., a father to four adult children and grandparent to two. “They learn that the money is used to get things. Then they learn that doing things can get money. Along the way, they can understand that money involves decisions and responsibilities.”
Do: Start with basic concepts about what money is and how it works. 6. DON’T BE A SOFTY WHEN IT COMES TO ENFORCING CHORES.
Once you establish a plan for allowance tied to chores, enforce it. Don’t be a pushover when your child cries for something they wanted if they didn’t hold up their end of the bargain. If your son or daughter didn’t finish the required chores, explain calmly and clearly why the rules exist so they learn the consequences — good and bad — of your agreement. You will be laying a good foundation for teaching them a strong work ethic.
Do: Plan how an allowance will work before introducing it to your children, then enforce it. 7. DON’T ALLOW KIDS TO HANDLE MONEY WITHOUT DIRECTION ON WHERE TO PUT IT.
Mike Argiro, of Wallingford, Conn., said he taught his son at an early age to allocate any money he received into different categories: “Money he could not spend — saving for something bigger — charity, car fund — ever since he was little he was focused on getting a car. When my son was very young, we just had … jars marked in each category. As he got older, we opened a checkbook for bigger items and a mutual fund for his car fund. He is now 14 and is closing in on $10,000 for his car fund.”
Do: Teach children how to save, spend and give. 8. DON’T LET YOUR CHILD MOVE THROUGH LIFE WITHOUT SETTING GOALS.
Goals can help a child determine what is important, how to work hard and how work earns rewards. Hard work also helps a child to avoid centering self-worth on material goods.
Do: Encourage children to set realistic and age-appropriate goals. 9. DON’T FORGET TO TEACH YOUR CHILDREN THE POWER OF NEGOTIATION.
“When my son was in the sixth grade, he wanted a Razor scooter for $60,” Nast recalled. “I knew that would take awhile to save for, so we talked about that, and then he asked if he worked for two weeks and saved part of it, would I pay the difference so it wouldn’t take a month to get it. We agreed on three weeks, and I would pay half.”
Do: Explain how negotiation works and its importance in money management. 10. DON’T MISS AN OPPORTUNITY TO BEGIN TEACHING AT A YOUNG AGE.
Start teaching your kids about the proper handling of money as soon as they reach the age where you think they’ll be able to comprehend a basic money lesson, said Carly Fauth, of Milford, Mass., a mother to two boys, 6 years and 7 months old. “A great beginner course to consider is to purchase an inexpensive toy cash register, then educate them on how many pennies equal a nickel, how many quarters equal one dollar, and so on.”
Do: Consider toys that can double as money-teaching tools. 11. DON’T UNDERESTIMATE THE POWER OF REAL-LIFE SCENARIOS.
“Once children have learned how money has worked with the cash register, then take them with you on your grocery shopping trips,” Fauth suggested. “If you used coupons and saved $15 on your trip, show them that on the receipt. You can also do some comparison shopping with them on the toys they want.”
Do: Turn routine shopping trips into money-teaching lessons. 12. DON’T FORGET THE IMPORTANCE OF SAVING MONEY.
“Take 15 percent off the top of any allowance/pay for savings to show them that paying themselves first is non-negotiable,” Stevens said. “Choose a family vacation together and have your children work out what needs to be saved per month and have them contribute a bit towards that monthly goal.”
Do: Create a savings mentality with your children. 13. DON’T FAIL TO EXPLAIN THE POWER OF COLD, HARD CASH.
When your children are at the age of wanting things they see, give the cash to your children and have them hand it to the clerk, who hands the purchase to the children, Mulvey suggested.
Do: Have your children practice spending cash so they can visually see an impact. 14. DON’T BAD-TALK BEING WEALTHY.
No matter what background your family comes from, never teach children that wealth is bad. Wealth can help others and make positive impacts on the community.
Do: Teach children what it means to be wealthy and how to use money to help others. 15. DON’T MISUNDERSTAND THE DIFFERENCE BETWEEN WANTS AND NEEDS.
Don’t shop for clothing as a sport, Stevens said. “Wait 24 hours to make any purchase that isn’t a pure need to make sure the want is something you really want.”
Do: Teach children the difference between a want and a need. 16. DON’T ALWAYS HAVE YOUR WALLET FULL.
“Intentionally arrange on occasion, perhaps once per week, for your wallet to not have enough cash, and so the purchase must be delayed,” Mulvey said. “Show the empty wallet.”
Do: Plan opportunities to teach your kids about money versus fulfillment. 17. DON’T LET KIDS THINK MONEY GROWS ON TREES.
“I have two little girls,” said Kimberly Evans, of Ocala, Fla. “When they were about 3 and 4, they hated when I left for work. I let them know going to work gets you that Dora toy you wanted and buys your favorite chips.”
Do: Explain to children how much items cost and how long it takes to work for them. 18. DON’T TAKE IT PERSONALLY IF YOUR CHILD IS ANGRY OVER MONEY LESSONS.
Nobody said teaching financial responsibility to children was easy. Some lessons might be more trying than others. Don’t give up. Your child’s disappointment or anger will not last.
Do: Remind yourself that your child is learning and will not stay angry at you forever. 19. DON’T USE COMPLEX MONEY LANGUAGE WITH CHILDREN.
Use terms that they can understand. “For example, don’t try to explain to them what the APR is on a credit card,” Fauth said. “Instead, tell them that is the penalty you have to pay if you carry a balance.”
Do: Talk to your children on their level and in simple terms. 20. DON’T NEGLECT THE POWER OF MONEY IN TEACHING MATH.
“Once a child can count and do simple arithmetic, they are ready for an allowance,” Mulvey said.
Do: Tie in allowance to a math lesson. 21. DON’T STIFLE YOUR CHILDREN’S CREATIVITY.
Esther Diaz of Los Angeles said that she encouraged her children — an 8-year-old boy and 6-year-old girl — to start businesses. “They solicited work from our neighbors — either bringing in the trash cans for them or feeding their pets. The outcome of their business resulted in my starting my own business.”
Do: Encourage children to devise ways to earn money and learn in the process. 22. DON’T FORGET YOUR CHILDREN ARE WATCHING YOU.
One of the easiest ways to teach your children about money is being a good role model. Children look up to you and want to be you. Be the financial person you want them to be.
Do: Remember the influence that your everyday actions have on your children. 23. DON’T BEGIN OFFERING ALLOWANCE WITHOUT THINKING LONG TERM.
As your child learns skills, from taking on more responsibility to how to negotiate, you’ll need to adjust your allowance and chore agreement. “Requests for raises in allowance are agreed in exchange for more important chores that they decide to add, such as loading the dishwasher on all Mondays and then Mondays and Tuesdays for even more money,” Mulvey said.
Make sure to challenge your child with chores that are suited to his age and ability as well as with responsibilities that will teach him new skills. As your child gets older, you can allow him to suggest new responsibilities, too, which can encourage his sense of contributing to the household.
Do: Plan for how allowances and chores will grow as your child does. 24. DON’T PAY FOR YOUR TEEN’S VEHICLE IN FULL.
Vehicles can feel like something teens are entitled to, especially if their classmates are showing up to school driving new wheels they did not earn.
Do: Meet your teen halfway: Your teen saves up for half the cost, and you match the other half. 25. DON’T LET TEENS LOAF.
Nast’s children learned that they had to work for what they wanted. “They both ended up getting part-time jobs in high school so they could date and put gas in the car,” she said. “Eventually they saved money for down payments on their own cars and took out loans.”
Do: Discuss the importance of working part-time once your children are old enough. 26. DON’T LIMIT A CHILD’S OPTIONS WITH MONEY.
Evans gives her children options when they want something expensive. “I feel this way I know the choices that they will make when it comes to handling money,” she said. “They can get the one expensive toy or 10 non-expensive ones. Either way, I would be spending the same amount of money, but I can get an idea of where my children’s heads are.”
Do: Teach children the impact their choices have on money. 27. DON’T FORGET YOUR CHILD’S AGE AS YOU TEACH LESSONS.
Money management lessons have the most impact when given to your child at the right age. Consider lessons for children, pre-teens, teens and young adults. Each stage of life warrants a different money lesson.
Do: Table some lesson ideas for when your child will be old enough to understand the lesson. 28. DON’T GIVE YOUR CHILDREN MONEY WITHOUT FIRST HELPING ORGANIZE IT.
“I thought it was important for them to have a system that allowed them to physically handle, organize and track their money,” Diaz said. “In this way, money becomes tangible and meaningful. It’s not an amorphous thing that exists in an increasing age of credit cards and mobile payments.”
Do: Encourage children to open savings accounts to store their money safely. 29. DON’T FORGET THAT TEACHING MOMENTS ARE ALL AROUND.
Think outside the box. From eating at restaurants to doing chores, opportunities for money lessons are everywhere.
Do: Consider all the ways money touches your life and that of your child. 30. DON’T TRY DO IT ALONE.
Sometimes it can be challenging to remember what you learned at a certain age or when you first understood money concepts. Take a cue from your child’s math classes and homework. Talk to their teachers about what your child is learning. Arm yourself with this information to form age-appropriate lessons.
Do: Seek outside guidance from teachers and other educators when teaching children about money.
Written by Holly Hammersmith of GoBankingRates