|
TIPS
Kids and Money
|
Myrna DuBois, Extension Educator
University of Nebraska Cooperative Extension
Families vary widely in what they wish to teach their children about money. However, most families wish for their children to learn to manage the money available to them and grow up to be responsible with money.
Very young children can learn that in order to buy things at the store, a person needs to pay money for it. That is probably one of the first learnings. As children grow older, they learn that money does not come in unlimited supplies. A parent can explain and explain this, but until a child has experience with limited money, they don’t really understand. Therefore, instead of going shopping or to a special event with the idea they can buy something if they find something they want, a parent will do well to specify how much the child may spend. This works well with most grade school age children, and even high school youth. This helps avoid fussing for everything, expectations they can buy several items, and other such family outing challenges. Children are somewhat fascinated by budgeting their money in this way and will make more careful choices than if given a more open ended possibility.
Some families want children to earn their money with household chores. Others emphasize that household chores are everyone’s responsibility and they prefer to give an allowance. Still others don’t have a specified amount or way for children to get their money, but prefer to pay for things as needs arise. Each family will vary in which they feel is best. Some of this relates to their past experiences, and some relates to how much money is available in the family.
No one can say what a child’s allowance should be. That is going to vary a lot. However, it is important that children know what their allowance is expected to cover. A small allowance might be intended for incidentals such as treats. A medium sized allowance might include toys and other such things the child wants. A larger allowance might be specified to include school lunch, transportation expenses, clothes, gifts, and more.
The age of the child is an important factor. Small children are often not ready to manage a larger amount of money or make complex decisions, while a teenager needs to be learning those skills.
An important concept for parents to teach their children is that when it’s gone, it’s gone. Parents who bail their children out if they make poor choices, in other words give them more money, are failing to teach their children to manage money and to make good decisions. A child can also learn to save for a special item they want instead of blowing each week’s allowance on frivolous things. In order to do both these things, parents need to allow some natural consequences as a way for the child to learn. For example, if the child wants to buy an inexpensive toy, then wishes for a more special one, they won’t learn this concept if the parent insists on them waiting. They learn by being given that choice. The parent can explain, but go ahead and allow the child to make the mistake a time or two. Once they realize they won’t be able to save for the more special item, they will usually stop and think before they use the money less wisely.
A final important concept to teach a child is how to live within the means of the family’s income. The above suggestions will help a child learn by doing, but young people also need to know what kinds of things a family’s income has to cover. In addition, if a young person has a job, the parents can help them focus on what their income is to cover. A child who is allowed to buy whatever they want with the money they earn may have a great deal of difficulty managing household income when they are a young adult because there is no longer money to blow. If a parent guides a young person with a job to save some, to cover some of their basic expenses rather than just get fun things they want, and to make purchases carefully, they will help them to become a good money manager.
