One of the many things I want to teach my children is how to manage money. I have seen many financial mistakes young people make and some of them are life disabling.
I was raised by a financial planner and feel many of the lessons I learned gave me an advantage in life. The phrase credit card debt was offensive. I also didn’t have to destroy my credit to learn about its importance.
I am committed to teaching these and many other lessons to my children and the best way to teach children about money is to let them make a few mistakes with real money while the stakes are low.
My wife and I had several disagreements on how to teach some of these lessons. We both agreed the kids should have experience with real money but disagreed on how they would get that money.
I thought the best way for kids to get money was chores. My wife didn’t like this. She didn’t want to pay the kids for doing chores and felt paying the kids to do chores would give them a sense of entitlement. She wanted the kids to contribute to household work because they are members of the family and helped make the mess.
I agree with her logic. The problem remained, though, how do you let kids have their own money. Giving them money for nothing was not an option; a welfare system would also instill a sense of entitlement.
After a few tense discussions, we agreed to meet in the middle. The kids would have to do certain chores for free. Dishes, laundry, and general cleaning are a few examples. The kids then had a list of chores they could do for money. Washing cars, mowing lawns and raking leaves are tasks they could complete for an allowance.
One vital rule was they could not do chores for money until they had done the free ones.
Meeting in the middle has worked well. We feel like the kids have learned to be productive members of the house and have learned a few things about spending money.
Most purchases my kids make are impulsive, usually candy and toys. Quickly, the toys lose their appeal and clutter the closets. I can then pose the question to my kids if they wish they could have their money back. Most often they say yes, but this is only because they would prefer a newer toy.
Slowly, my older kids have learned the value of money and have even started to save on their own. I’m excited because I never forced them to open a savings account. I taught them about saving, and they naturally moved that direction. My oldest enjoys asking how much she has in her savings account.
I have heard many people complain that schools don’t teach children how to manage money. Parents can’t pass all educational responsibility to the government. Some lessons that aren’t taught in the home will never be learned.