Teaching Children Financial Responsibility

[pennymom]

I read a post on another thread about the way one family is trying to teach a four-year-old about finances, and it got me to thinking.

We give DS6 $3 per week allowance, and DS8 $4 per week, all in quarters to make it easier to work with. They each have a Money Saavy Pig bank. Every week, they decide how to divide their money, such as $0.25/$0.50 to donate, $0.50 to invest, and the remainder shared between save and spend. Depending upon what they are saving for, (and how much they want it!) the amount put into save and spend varies week to week. When they are up to $5 in the donate section, we discuss possible charities and they choose which one to support. So far, they have adopted an injured turtle at a wildlife refuge, supported Alex's lemonade stand, UNICEF, and other charitable organizations. Last week, DS8 put $1.00 of his $4 into donate as we had recently talked about how much we have compared to many other families, and how hard it must be to choose between putting food on the table and paying bills, which made me very proud. Until they are older, the invest potion is used to save for Christmas shopping. In a few years, we plan to teach them about investments, as each has a small money market account set up. Once they decide how much will go into each section, they trade in some quarters for dollars.

So, how do you teach your children about finances/handling money?

 

[holycow]

Just had to say thanks for that website.

 

[kimblebee]

I second the thanks for that website. I will be buying this for my 10 y.o. daughter for Christmas. What a great way to make it really concrete as to where their money goes.

 

[okeydokey]

Cool bank. We have always done this same system with our kids, but they have 3 separate banks to put the money in. We do save, give and spend. I don't expect them to give any back for living expenses, considering they are my children and I had them with the expectation that I would be providing support to them.

I think the investment portion is a great idea though, and I'll have to look into that.

 

[pennymom]

Glad someone found the bank info helpful. We unexpectedly received them from our bank when we opened the kids' accounts, and have given them as gifts a few times since. I believe they came with a booklet of ideas for teaching kids about money management, and oval stickers so they can label what they are saving for, donating to, etc.

 

[C.Ann]

This is great!! DGD wanted some kind of bank other than just a "plain" bank, so I think I'll order this for Christmas.. What a great way for kids to learn the various aspects of what to do with their money!!

Thanks for sharing!

 

[clh2]

I read a post on another thread about the way one family is trying to teach a four-year-old about finances, and it got me to thinking.


So, how do you teach your children about finances/handling money?

We started giving our DD an allowance when she was 6. We gave her $5 per week. The only rules on it were that she could not buy snacks before dinner.

She very quickly learned about sales tax - her $5 allowance only bought about $4.70 of stuff. She also very quickly learned that if you buy junk...it breaks...and therefore is a waste of money. She also learned if you loose your money...poof...it is gone. Also - she learned that saving your money is the only way to get "bigger" things. And...once your money is gone - well it is gone until the next allowance day. And - they learn to count their change. The bonus - having their own money really helps math skills!

The hardest part at that age - is letting them make mistakes. I am SO glad we did this. I know too many adults that never handled their own money as kids, and now have no clue how to manage it as adults.


DD is now 16, and has a great respect for the money we give her...as well as the money she earned babysitting and now working. Now that she has "earned income" we are discussing with her the benefits of a Roth IRA (there just wouldn't be a tax benefit for her to use her employer sponsored 403B - which any employee regardless of age can contribute to.) When DD goes shopping at Target, she usually conducts 2 transactions "parent-paid" items like necessities, and the splurges which she pays for. I.e. we pay for school supplies...she pays to replace a H2O bottle she misplaced. We pay for the mandatory stuff needed for her sports. If she wants the special "cinch sack" or whatever t-shirt is available, she pays for that.

 

[DVCLiz]

I saw that post and I have to wonder - when that child misbehaves do they threaten her with an IRS audit? I'm all for teaching age-appropriate financial responsibility but I thought it was ridiculously over the top.

 

[pennymom]

I saw that post and I have to wonder - when that child misbehaves do they threaten her with an IRS audit? I'm all for teaching age-appropriate financial responsibility but I thought it was ridiculously over the top.

Love it!

 

[C.Ann]

I read a post on another thread about the way one family is trying to teach a four-year-old about finances, and it got me to thinking.

We give DS6 $3 per week allowance, and DS8 $4 per week, all in quarters to make it easier to work with. They each have a Money Saavy Pig bank. Every week, they decide how to divide their money, such as $0.25/$0.50 to donate, $0.50 to invest, and the remainder shared between save and spend. Depending upon what they are saving for, (and how much they want it!) the amount put into save and spend varies week to week. When they are up to $5 in the donate section, we discuss possible charities and they choose which one to support. So far, they have adopted an injured turtle at a wildlife refuge, supported Alex's lemonade stand, UNICEF, and other charitable organizations. Last week, DS8 put $1.00 of his $4 into donate as we had recently talked about how much we have compared to many other families, and how hard it must be to choose between putting food on the table and paying bills, which made me very proud. Until they are older, the invest potion is used to save for Christmas shopping. In a few years, we plan to teach them about investments, as each has a small money market account set up. Once they decide how much will go into each section, they trade in some quarters for dollars.

So, how do you teach your children about finances/handling money?

Did you happen to post this on the Budget Board too? I think a lot of folks over there would like to hear about it..

 

[pennymom]

Did you happen to post this on the Budget Board too? I think a lot of folks over there would like to hear about it..

Thanks, C.Ann, I will!

 

[tvguy]

The best way to teach is by example.

My kids grew up with a cheapskate for a dad. Grew up eating a lot of store brand food and soda, wearing the $15 shoes instead of the $125 ones, the $7 blue jeans instead of $30 ones (or the $250 dollar ones one of my coworkers buys ) and watching a 25 year old TV instead of a $3,900 Plasma. The reward was, when you really wanted something, you not only could do it, but pay cash for it. A Disney cruise, a trip to Hawaii.

You can tells kids how to manage money well, but if you aren't doing it, the words fall on closed ears.

 

[golfgal]

The best way to teach is by example.

My kids grew up with a cheapskate for a dad. Grew up eating a lot of store brand food and soda, wearing the $15 shoes instead of the $125 ones, the $7 blue jeans instead of $30 ones (or the $250 dollar ones one of my coworkers buys ) and watching a 25 year old TV instead of a $3,900 Plasma. The reward was, when you really wanted something, you not only could do it, but pay cash for it. A Disney cruise, a trip to Hawaii.

You can tells kids how to manage money well, but if you aren't doing it, the words fall on closed ears.

I think learning by example is a good thing but I also think it is important to teach kids that sometimes it is less expensive in the long run to spend a little more to buy quality. I can buy my kids 4 pair of $15 tennis shoes in a year (because they don't last very long) or one pair of $50 shoes that will last for 2 years. We also don't buy our kids a lot of stuff just because-anything "big" is a gift usually. The kids look at price tags and decide it is really worth the cost to have whatever it is. If they want something I don't like, they have to pay for it with their own money-usually that is the deciding factor of how much they really like something too .

There is no way a 4 year old understands tax and how it works. You do need to do age appropriate lessons for them to have any value.

 

[jodifla]

I read a post on another thread about the way one family is trying to teach a four-year-old about finances, and it got me to thinking.

We give DS6 $3 per week allowance, and DS8 $4 per week, all in quarters to make it easier to work with. They each have a Money Saavy Pig bank. Every week, they decide how to divide their money, such as $0.25/$0.50 to donate, $0.50 to invest, and the remainder shared between save and spend. Depending upon what they are saving for, (and how much they want it!) the amount put into save and spend varies week to week. When they are up to $5 in the donate section, we discuss possible charities and they choose which one to support. So far, they have adopted an injured turtle at a wildlife refuge, supported Alex's lemonade stand, UNICEF, and other charitable organizations. Last week, DS8 put $1.00 of his $4 into donate as we had recently talked about how much we have compared to many other families, and how hard it must be to choose between putting food on the table and paying bills, which made me very proud. Until they are older, the invest potion is used to save for Christmas shopping. In a few years, we plan to teach them about investments, as each has a small money market account set up. Once they decide how much will go into each section, they trade in some quarters for dollars.

So, how do you teach your children about finances/handling money?

We have this bank...it's great! And so much more appropriate than taking taxes out of a 4-year-old's allowance.