Monday, May 9, 2011
How to teach kids the value of money
BY SHERRY THOMAS
One of the greatest life skills in which we as society and as guardians fall short is the education of money and money skills, beginning at an early age. Many children who are not taught money lessons grow into adults who struggle with the concept of savings, budgets, and basic money-management skills.
Once you've established a savings account for your child, have your child fill out the deposit slip and give it to the teller. Something psychological transpires when there is a physical release of money, but be careful to explain that while the money is now not in a drawer or envelope, easily viewed by the child, the money is now protected by vaults and people who are trained to watch it.
Show him/her how to keep the deposit slips in an envelope for reference. On the outside of the envelope, have the child write the amount of the deposit and the date to keep a running total. Many banks have now dispensed with passbooks, opting to place everything online. That's even better as it forces us to manually teach our children how to keep records.
Teach you child about credit cards, borrowing money and how you have to pay back interest. A great example is to show them the purchase price of a home and how much, over years, the home ends up costing due to accruing interest.
Use the supermarket as a money education forum. It's a great place to explain value for your money. Show them how the best bargains are located usually on the lower shelves. Explain to them why. (The supermarkets make more money if you purchase what costs more. We tend to buy what is within our sightline. So, if we don't see it, we don't buy it, thus, the savings is usually on lower shelves that are more
difficult to see.)
Pick up both a 1-pound bag of rice and a 2-pound bag. Which costs less long term? Make a game of finding the best value for the item that you need. Sometimes two 8-oz. cans of something cost less than one 16-oz. can and vice versa.
Teach your children the value of list making. When going to the supermarket, buy what's on the list and try to avoid other temptations. If you're like most of us, there will be items on that list that are impulse items. Add up the value of those items and explain how much additional money was spent when the original intent was to spend less. Compare the cost difference and lay out that difference in actual cash on a table. Visual is best.
To make it fair to all siblings, a good rule of thumb (per week or per month, depending on what you can afford) is $1 for each year of age.
An 8-year-old would get $8 a week or month, a 15-year-old would receive $15 a week or month. This system is a good way of rewarding maturity and giving the younger ones something for which to strive.
Yes, parents, children need chores, and not all chores necessitate bribery or allowances. Explain the difference. As part of a family, you are expected to contribute to the family household upkeep. Choose which chores will merit an allowance. Even a 4-year-old can learn to bring the trash can over to the parent and help empty it into the larger vessel. A small child can pick up toys, place clothes into a hamper. By assigning chores, you are giving your kids a gift - the gift of discipline and cleanliness and work ethic and rewards.
Money is only a mystery if we make it so. Arm your children with valuable money concepts early.
More on money lessons:
Sherry Thomas is president of The Palm Beach School of Etiquette and Life Skills. Follow her on Twitter @EtiquetteQueen.