Think back to your childhood. Did your parents teach you about money? Did they tell you what to do with it when you earn it or are even gifted it? Or did you parents teach you through their own actions and now you have adopted their practices, good and/or bad?
I realize that there are a million perspectives on this topic. This is my perspective, not right or wrong, just my perspective. I will be covering 2 areas in this blog; my current practice with my 10 year old and some basic tips per age group.
As most of you know my path with money was not perfect by any means. My “money memories” as a child were lack, bankruptcy, money = status. At no point did my parents ever teach me to save money, how to spend it responsibly or how to respect it at all levels. I was on my own. I worked from a very young age (13) and have always had money, however, what I did with it was certainly not in my best interest long term!
I was academically educated in money but never really understood what that meant for “me” and my future so I never acted on that knowledge. I knew that I “really should be putting into an retirement savings plan” but never acted on it….at least until I was almost 30. Even then I would put it in and take it out. Now, I get it! For the past 10-15 years I get it! I fully understand the impact on my own retirement and how much I will need and how much I have to save.
Getting back on topic….kids. They see everything we do and easily replicate those behaviours. Most of the work I do with my clients is around reprogramming their mindset and behaviours learned from childhood. My daughter is no different. I make a good income so she is used to having what she wants, at least she used to! I had the money so I she would have what she wanted. About 5 years ago I realized that this was not serving her at all and am working on doing some damage control of my own!
Lets first talk about allowance. To give or not to give? How much? Should they do chores for it?
On top of this, some parents give it regularly and some sporadically. For years I was a parent who gave it sporadically and no chore completion was required. Today, my daughter does not let me skip a week! She is given $10 a week ($1 for every year of age). To some people this may seem like a lot, however she has certain things she must do with her money. Right now we have her $10 split 5 ways! $5.00 for necessities, $.50 for donations, $1.00 for long term savings (never to be touched), $1.50 mad money, and $2.00 for short term savings. She is required to have a goal for her short term savings and can see her progress towards that goal. The necessities fund is something we started recently (this is based on my adult programs I use in my coaching programs) and for her is to be used for gifts and clothes. I buy her standard clothes but if she wants something more than I am willing to buy she has to pay for it herself. She is learning the value of money real fast! She has gone through the “buyers remorse” already and is consciously thinking about her purchases now where before she would just spend the money without a thought.
As for chores, she is required to do various tasks around the home such as feed the cat, change the cat litter box (ours is automatic), clean her room, sort the laundry and empty the dishwasher. I have not tied this at all to her allowance, she is just responsible to do this as a member of our home.
At least once a year I have given her the opportunity to earn money….more than her allowance. With our recent home renovation she helped me haul stuff to the dump, rip out carpets, and various other tasks. She made minimum wage for her time. I was grateful for her help and she actually earned the money. She is looking forward to her first real job! Even now she wants to volunteer (and is not afraid of finding the manager and asking!) but most places will not allow her to volunteer until she is at least 13 years old.
Now to teach them about money…interestingly they will learn more from your actions than from any educational lessons you can give them. If it is transparent to them that you save money for large ticket items, vacations or other items, they will learn from this. If you put everything on a credit card they will learn from this also! This was a particularly challenging concept for me to teach my daughter because I put all my purchases on an American Express Charge Card. It is not a traditional credit card in that you have to pay the balance in full each month…..no other options! If you don’t pay ALL of it they suspend your card! This has been particularly helpful to me in learning to manage my money over the years.
Here are some tips for the different age groups. Again, these are just options but keep in mind that the outcome you want years later for your child.
This is when children are first getting familiar with money and that you need it to buy things to live. This is also a time when they pick up many habits through watching you!
Here are a few considerations for this age group:
1. Give a weekly allowance – at this age it can be a simple nominal amount or you can start a program such as $1 per year of age.
2. Teach them to learn to save at this age! It is much harder habit to create later when they are bombarded with advertising and pressure from peers. Many people put all their money given to them into savings, or you may choose to buy something with half and save half.
3. Practice waiting is a great lesson at this age. It can even be with a treat that they love. “You can have one now or 2 in 10 minutes”.
4. Playing store with your children is great for the personal interaction (quality time is more important than anything) and they can learn a few lessons about how money works. If you happen to have a modern toy cash register that accepts credit cards be sure to close the loop on this and show that you still need to pay for it!!!!!
This age group can be heavily influenced by advertising depending on how much screen time they get. Their peers also have a great influence on the “want” aspect of things. Knowing your child’s view on money at this point is key to your next moves. I recognized that my daughter loved to have new things all the time and I took some big steps to get her to change some of her thought processes around money.
Here are some considerations for this impressionable age:
1. If you have not done so already start a savings account as well as a donations jar.
2. Increase their allowance as you see fit.
3. Explain value when purchasing an item. This was a recent big lesson in our home.
4. Increase the amount of responsibilities they have in the home. These are essential skills to learn!
5. Set financial goals with them for short and long term.
6. Share in some of the household bill paying time. It is important for them to see that the phone and electricity are not free! Share with them any household budget you have.
7. This is a great age to talk about advertising and how they deliberately persuade you into buying something you might otherwise not want!
Starting new mindsets and behaviours can be quite challenging at this age, as is anything else at this age. How things go in the teen years will be dependent on your relationship with your teen as well as any money behaviours they have acquired.
Here are some guidelines to consider for this age group:
1. Put them to work…..babysitting, a real job, extra work at home
2. Show them how to use an ATM card
3. Change their allowance to a monthly one instead of weekly to teach them how to budget their money
4. Start teaching the basics of investing money and compound interest (I will be writing an entire blog on this coming soon!)
5. Explain their first real paycheque to them and where all the money goes.
These are just a few concepts you can introduce into your home. I could write volumes on this topic but this is just a simplified version to get you going if you have not started yet! Everyone should do what is right for them. Having said that, be very mindful that your children will follow what you do MORE than anything you tell them to do! Monkey see, monkey do!